On April 10, 2014, the shares of Alliant Energy Corporation (LNT) hit a 52-week high of $57.37 in intraday trading to finally close a trifle lower at $56.52. This comes to a gain of 13.8% over the past one-year period. The company has been performing well, registering positive earnings surprises in the last four quarters, with an average beat of 9.85%.
Alliant Energy’s performance is attributed to a steadily increasing pool of customers in its service territories. The company was thus able to sell higher volumes of electricity and natural gas in the fourth quarter compared to the prior year comparable period. In addition, industrial customers are expanding their operations, thereby creating further avenues for demand growth in 2014.
Improvement in the economies of Iowa and Wisconsin and a lower unemployment rate in these states compared to the national average are expected to boost demand for Alliant’s services.
Recently, Alliant Energy entered into an agreement with Iowa Utilities Board for not increasing the base electricity rate until 2016. In addition, the company applied to keep the electric base rates unchanged in Wisconsin through 2016 (decision expected in second quarter 2014). We believe these moves will allow the company to retain and add more customers in its service territories.
Alliant Energy is also investing judiciously to create a balanced generation portfolio, which will attract lesser environmental ire. In addition, Alliant Energy plans to invest nearly $190 million in the 2014 to 2016 time period to strengthen its transmission network. These planned investments will help serve its customers in a more efficient manner.
Alliant Energy reported earnings per share of $3.31 in 2013. The company projected earnings in the range of $3.25 to $3.40 per share for 2014 taking into consideration higher Interstate Power and Light Company and Wisconsin Power and Light Company rate base.
The Zacks Consensus Estimate for 2014 inched up 0.6% over the last 60 days to $3.40 per share. This reflects a year-over-year estimated increase of 4.58%. The long-term earnings growth is projected at 5.50%.
Alliant Energy currently carries a Zacks Rank #3 (Hold). Other companies in the industry worth considering are NRG Energy, Inc. (NRG), Otter Tail Corporation (OTTR) and Public Service Enterprise Group Inc. (PEG), all presently holding a Zacks Rank #1 (Strong Buy).
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