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Alliant Energy's (LNT) Clean Energy & CAPEX Goals Bode Well

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Zacks Equity Research
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Alliant Energy’s LNT investment in enhancing electric and gas distribution networks along with a diverse customer mix will continue to drive its performance. Also, its focus on reducing emissions and providing reliable, affordable energy is likely to enhance its existing operations.

This currently Zacks Rank #3 (Hold) stock delivered an average earnings surprise of 18.3% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings per share indicates 5.2% from the year-ago reported figure while that of 2021 bottom line suggests 6.8% year-over-year growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Tailwinds

Alliant Energy has plans to invest $6.6 billion over the 2020-2024 time period to strengthen its electric and gas distribution network as well as add natural gas and renewable assets to its generation portfolio. Thus, its rate base is expected to expand to $13.9 billion in 2024 from $9.4 billion in 2019. A constructive regulatory environment will help the company recover its capital expenditures.

Along with funding projects, the utility is planning to voluntarily retire all its existing coal-fired generation units by 2040 with an objective to lower emissions from the 2005 levels by 50% and 100% within 2030 and 2050, respectively. Alliant Energy is making strong progress with its clean energy initiatives and already reduced carbon dioxide emissions by 35% in 2019 from the 2005 baseline.

Other electric utilities are also adopting measures to supply clean and reliable energy to their customers. Some of the companies like Duke Energy DUK, DTE Energy DTE and Xcel Energy XEL are planning to provide absolute clean energy by 2050.

Alliant Energy’s earnings prospects look attractive owing to the ongoing additions to its electric and natural gas customer volumes. Its geographic location and favorable regulatory developments bode well for its development of wind projects as well as its long-term earnings growth. In addition, a diverse customer mix provides stability to the company’s sales as it does not depend on a single group for revenues.

Headwinds

Increased competition from self-generation by large industrial customers, customer- and third party-owned generation (e.g. solar panels) as well as alternative energy sources can lower demand for the company’s services in Iowa and Wisconsin. Its operations are also subject to stringent regulations while fulfillment of new conditions could further increase its operating expenses.

Price Performance

In the past year, the stock has lost 0.5% against the industry’s rally of 3.1%.

 

 

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