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Alliant Energy (LNT) Gains on Investments & Debt Management

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·3-min read
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Alliant Energy Corporation LNT has been gaining from consistent investments in regulated natural gas and renewable assets to strengthen the electric and gas distribution network. An expanding customer base, efficient debt management and a stable return from regulated assets are likely to drive its performance over the long run.

Alliant Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Tailwinds

Alliant Energy plans to invest substantially over the next four years to solidify electric and natural gas distribution systems and make regular investments to reinforce its infrastructure. LNT has plans to invest $6.1 billion in the 2022-2025 period, following it up with investments in the range of $7-$9 billion for the 2026-2030 period. Nearly 40% or $2.5 billion of the planned capital expenditure will be directed to add clean power generation assets.

In addition, Alliant Energy’s diverse and expanding customer mix provides operational stability. In the first quarter, the company’s retail electric and gas utility customers grew 0.7% and 0.6% year over year, respectively, and the momentum is expected to continue in the coming quarters.

Alliant Energy’s debt to capital was 54.9% at the first-quarter 2022-end, down from the 2021-end level of 56.8%. The times interest earned ratio at the end of the first quarter of 2022 was 3.3, up 10 basis points from the 2021-end level. The strong ratio indicates that it has the financial strength to meet debt obligations in the near future.

The Zacks Consensus Estimate for 2022 earnings per share of Alliant Energy has moved up 4.6% year over year. LNT’s long-term (three to five years) earnings growth is currently pegged at 5.7%. Moreover, its current dividend yield of 3% is better than the Zacks S&P 500 composite’s average of 1.6%.

Headwinds

Alliant Energy operates in a highly competitive power industry. Dependence on third-party electric transmission systems and unfavorable fluctuations in weather conditions can lower the demand for services, which, in turn, can lower earnings and operational margins. Alliant Energy is exposed to increasing interest rates on borrowings, which can adversely affect the company’s performance. LNT is also subject to stringent regulations and the fulfillment of new conditions, which can further increase operating expenses.

Price Performance

In the past year, shares of Alliant Energy have declined 2.4% against the industry’s 3.4% rise.

Zacks Investment Research
Zacks Investment Research


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Stocks to Consider

Some better-ranked stocks from the same sector are Global Water Resources GWRS, Hawaiian Electric Industries HE and American Water Works AWK.

Global Water Resources currently sports a Zacks Rank #1. Global Water Resources’ long-term earnings growth is projected at 15%. GWRS’ current dividend yield of 1.7% is better than the Zacks S&P 500 composite’s average of 1.6%. The company delivered an average earnings surprise of 154.2% in the last four quarters.

Hawaiian Electric Industries currently carries a Zacks Rank #2 (Buy). Hawaiian Electric Industries’ long-term earnings growth is projected at 3.2%. HE’s current dividend yield is 3.5%. The company delivered an average earnings surprise of 30.8% in the last four quarters.

American Water Works currently carries a Zacks Rank #2. American Water Works’ long-term earnings growth is projected at 8.1%. AWK’s current dividend yield is 1.8%. The company delivered an average earnings surprise of 5.3% in the last four quarters.


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