Alliant Energy (LNT): Assessing Valuation After $725M Debt Raise and Federally Backed Storage Project Launch

Alliant Energy (LNT) just wrapped up a $725 million offering of junior subordinated notes. This strategic move improves its balance sheet while supporting further investments in large-scale energy storage projects backed by federal grants.

See our latest analysis for Alliant Energy.

Alliant Energy’s latest financing win comes soon after the unveiling of their Columbia Energy Storage Project, highlighting the company’s growth ambitions and commitment to modern infrastructure. Despite the recent activity, momentum in the stock has been steady rather than swift, with a 1-year total shareholder return of just 0.16%. However, long-term investors have still seen meaningful gains over the past three and five years.

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With steady but unspectacular returns, expanding infrastructure, and only a modest discount to analyst targets, the big question for investors is whether Alliant Energy remains undervalued or if the market is already anticipating future growth.

Most Popular Narrative: 2.5% Undervalued

With Alliant Energy trading just below the most widely followed fair value estimate, the stock's narrative centers on anticipated elevated growth and margin improvement. This sets the stage for a debate about whether current optimism is warranted or overdone.

The company's adaptive resource planning and regulatory flexibility in Iowa and Wisconsin allows rapid deployment of new generation capacity, positioning Alliant to capture higher allowed returns and efficiently expand its regulated asset base, supporting long-term earnings growth and margin expansion.

Read the complete narrative.

Want to know which financial lever is fueling this price target? There is a bold profit margin bet at the core, along with a future profit multiple higher than what you will find for most utilities. The secret sauce is a revenue growth streak only the most forward-thinking utilities dare to predict. Dive deeper to find out exactly what anchors that bullish fair value.

Result: Fair Value of $68.5 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, heavy reliance on massive data center deals or delays in regulatory approvals could challenge management’s confident growth outlook and disrupt the current narrative.

Find out about the key risks to this Alliant Energy narrative.

Another View: DCF Results Add Another Layer

Looking at Alliant Energy through the lens of the SWS DCF model, the story shifts. This method suggests the current share price sits above its estimated fair value of $60.77. This implies the market might be pricing in more upside than is justified by future cash flows. Could the optimism be overstated, or is this just a quirk of DCF assumptions?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Alliant Energy Narrative

If you have your own take on Alliant Energy or want to dig into the numbers firsthand, you can build your own narrative in just a few minutes. Do it your way.

A great starting point for your Alliant Energy research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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