Alliant Energy (LNT) Rides on Investments, Clean Asset Add Ons
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 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. It intends to invest $8.5 billion during 2023-2026.
Constructive regulatory environment will enable the company to recover capital expenditures. Its strong and flexible investment plan will support an 8% base CAGR growth rate from 2022 through 2026.
LNT continues to expand its solar energy operations 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.
The regulated nature of Alliant Energy’s operations provides it with strong earnings potential. This, in turn, has enabled the company to increase its annual dividend rate for more than a decade. LNT has paid dividends since 1946 without fail. Nearly 99% of the company’s earnings are generated from regulated operations.
Headwinds
Alliant Energy’s utility operations — IPL and WPL — use the interstate electric transmission system that they do not own or control. FERC regulates the rates charged to these subsidiaries. In case transmission costs go up and the company is unable to recover those from its customers, operational expenses are bound to rise.
Fall in the third-party electric transmission system’s performance will adversely impact LNT’s operations and limit its ability to transmit electricity within the service territories.
Stocks to Consider
Some better-ranked stocks from the same industry are NiSource Inc NI, PPL Corporation PPL and OGE Energy Corp. OGE, 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.
NiSource’s long-term (three to five year) earnings growth rate is 7%. The Zacks Consensus Estimate for NI’s 2023 earnings per share (EPS) indicates a year-over-year increase of 8.8%.
PPL’s long-term earnings growth rate is 7.42%. The Zacks Consensus Estimate for PPL’s 2023 EPS implies growth of 12.8% from the 2022 reported number.
OGE Energy’s long-term earnings growth rate is 17.89%. It delivered an average earnings surprise of 19.9% in the previous four quarters.
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