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Why You Should Add Alliant Energy (LNT) to Your Portfolio


Alliant Energy Corporation LNT is poised for growth, given planned investments over the next four years to strengthen electric and gas distribution network, and the addition of natural gas and renewable assets to its generation portfolio. This Zacks Rank #2 (Buy) utility remains a promising bet, given focus on generating clean energy and initiatives to increase its shareholders’ value.

Growth Projections: The Zacks Consensus Estimate for 2019 earnings per share is pegged at $2.25 on $3.7 billion revenues. Both the bottom and the top lines are expected to rise year over year, indicating a 3.69% and 4.68% increase, respectively.

The consensus mark for 2020 earnings is pegged at $2.44 per share on revenues of $3.88 billion. While the bottom line translates to a 8.15% increase, the top line suggests a 4.84% improvement on a year-over-year basis.

Alliant Energy has an expected long-term earnings per share growth of 5.54%.

Impressive Price Performance: Shares of Alliant Energy have increased 19.6% in the past 12 months, outperforming the industry’s growth of 10.4% and the S&P 500 Index’s 2.4% gain.

Price Performance (One Year)

Upward Estimate Revisions: The Zacks Consensus Estimate for current-year and 2020 earnings has been revised 0.5% and 0.4% upward, respectively, over the past 60 days.

Consistent Dividend: The regulated nature of Alliant Energy's operation provides strong earnings visibility, which has enabled the company to increase annual dividend rate for more than a decade. It has been paying out dividends since 1946 without a fail. Nearly 99% earnings of the company are generated from regulated operations, which give an excellent visibility of upcoming earnings. The current dividend yield of the company is 2.76%, better than the S&P 500 average of 1.95%.

Growth Drivers in Place

Alliant Energy has plans to invest nearly $5 billion during the next four years in a bid to strengthen electric and natural gas distribution, and generation portfolio. The company is successfully completing major construction projects on time and at or below budget. Constructive regulatory environment will enable Alliant Energy to recover the capital expenditures.

It plans to invest nearly $2.2 billion in the electric distribution business and $645 million in gas systems in the next four years to strengthen its existing infrastructure.

Stable state economies in its service areas, the company’s geographic location and favorable regulatory developments bode well for the development of wind projects and long-term earnings growth. It currently targets long-term annual earnings growth in the range of 5-7% from 2018 levels. We expect Alliant Energy to keep up the impressive performance till 2022 on the back of capital expenditure plan, modest sales growth and constructive regulatory outcomes.

Other Stocks to Consider

Other top-ranked stocks in the utility sector are IDACORP Inc. IDA, Unitil Corporation UTL and Southwest Gas Corporation SWX, each holding a Zacks #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

IDACORP, Unitil Corporation and Southwest Gas reported average positive earnings surprise of 7.79%, 215.05% and 18.71%, respectively, in the last four quarters.

The Zacks Consensus Estimate for IDACORP, Unitil Corp and Southwest Gas for 2019 has moved up 0.2%, 0.9% and 0.3%, respectively, in the past 90 days.

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