Alliant Energy (LNT) Rides on Clean Portfolio Focus, Investments
Alliant Energy Corporation’s LNT investments in natural gas projects and stable return from regulated assets are set to drive its bottom line. LNT’s focus on electricity generated from clean assets will help serve its expanding customer base.
However, this Zacks Rank #3 (Hold) company’s dependence on third-party assets for transmission and strong competition act as headwinds.
Tailwinds
Alliant Energy’s earnings prospects look attractive due to ongoing additions to electric and natural gas customer volumes. Its geographic location and favorable regulatory developments bode well for the development of wind projects and long-term earnings growth.
A diverse customer mix provides stability to sales as the company does not depend on a single group for revenues. The ongoing economic development in its service territories and increasing customer base are also creating fresh demand for utility services and boosting LNT’s performance.
Alliant Energy announced plans to invest substantially over the next four years to strengthen the electric and gas distribution network as well as add natural gas and renewable assets to its generation portfolio.
The company continues to be the largest owner-operator of solar energy in Wisconsin. It has all solar sites and panels in control for its planned 1.1 gigawatts of utility-scale solar projects within the state by mid-2024.
Headwinds
Alliant Energy’s utility operations — IPL and WPL — use the interstate electric transmission system that they do not own or control. Rates charged to these subsidiaries are regulated by FERC. In case transmission costs go up and the company is unable to recover those costs from its customers, operational expenses are bound to rise. Fall in performance of the third-party electric transmission system will limit LNT’s ability to transmit electricity within its service territories and adversely impact operations.
Stocks to Consider
Some better-ranked stocks from the same industry are FirstEnergy Corporation FE, OGE Energy Corp. OGE and Entergy Corp. ETR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FE’s long-term (three to five year) earnings growth rate is 6.45%. The Zacks Consensus Estimate for FE’s 2023 earnings per share (EPS) indicates a year-over-year increase of 5%.
OGE’s long-term earnings growth rate is 3.65%. It delivered an average earnings surprise of 3.8% in the previous four quarters.
ETR’s long-term earnings growth rate is 5.65%. It delivered an average earnings surprise of 3.4% in the previous four quarters.
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