Did Alliant Energy (LNT) Deliver a Strong Q4 Performance

Key Takeaways

• Alliant Energy (LNT) recently beat Q4 2025 earnings and revenue estimates, driven by strong utility performance and increased customer demand.
• The company is embarking on an ambitious $13.4 billion capital expenditure plan through 2029, primarily fueled by significant data center load growth and renewable energy investments.
• While this CapEx surge promises substantial rate base expansion and long-term EPS growth, investors should monitor the planned $2.4 billion in new equity raises and rising operating costs.

Did Alliant Energy (LNT) Deliver a Strong Q4 Performance?

Alliant Energy (LNT) recently announced a robust fourth-quarter 2025 performance, exceeding analyst expectations for both earnings and revenue. The utility reported earnings per share (EPS) of $0.60, comfortably beating the Zacks Consensus Estimate of $0.58 by 3.45%. This positive surprise follows a mixed prior quarter but marks the third time in the last four quarters that Alliant has surpassed EPS estimates, signaling a return to consistent operational delivery.

Revenue figures also impressed, with the company posting $1.06 billion for the quarter ended December 2025. This figure not only represented a 9% increase year-over-year but also significantly outpaced the estimated $844.8 million by 13.45%. The strong revenue growth was primarily driven by a 9.7% increase in Electric Utility revenue to $870 million and an 11% rise in Gas Utility revenue to $159 million, underscoring the health of its core regulated businesses in Iowa and Wisconsin.

This solid Q4 showing contributed to a positive year for Alliant, with 2025 GAAP EPS rising to $3.14 from $2.69 in 2024, and ongoing (non-GAAP) EPS increasing to $3.22 from $3.04, representing 6% growth. The market reacted positively to the news, with LNT shares trading at $70.01, up 0.69% on the day, and having added about 7% since the beginning of the year, outperforming the S&P 500's modest 0.5% gain over the same period.

The company's ability to consistently deliver on its financial targets, especially in a capital-intensive and regulated industry, is a key indicator for investors. Management attributed the strong results to effective execution on its growing regulated investment plan and increasing customer demand, including a renegotiated electric service agreement with QTS, a major data center operator. This strategic focus on high-growth areas, coupled with operational efficiency, positions Alliant Energy for continued stability and potential upside.

What's Fueling Alliant Energy's Ambitious Capital Expenditure Plan?

Alliant Energy is embarking on an aggressive capital expenditure (CapEx) program, projecting a staggering $13.4 billion in investments through 2029, a 17% increase from previous forecasts for the 2026-2029 period. This massive spending plan is not merely incremental; it represents a strategic pivot designed to capitalize on two major, high-demand areas: the clean energy transition and the explosive growth of mega data centers within its service territories. This dual focus provides a clear runway for future earnings.

The most immediate and powerful growth driver for Alliant is the surging demand from the data center industry. The company has secured commitments for approximately 3 gigawatts (GW) of contracted data center load, which is projected to increase its peak energy demand by an industry-leading 50% by 2030. This isn't just a speculative forecast; it's already translating into projected electric sales growth with a compound annual growth rate (CAGR) of 9-10% from 2025 to 2030, a powerful tailwind for a traditionally slow-growth regulated utility.

To power this burgeoning demand, Alliant is executing an aggressive clean energy transition. Over 40% of its CapEx is allocated to renewables and energy storage projects, with annual investments ranging from $1.06 billion to $1.50 billion over 2026-2029. This commitment not only aligns with decarbonization goals but also allows the company to secure valuable tax benefits and leverage a constructive regulatory framework in Iowa and Wisconsin. The plan also includes significant investments in gas projects, peaking at $1.52 billion in 2027, alongside steady spending on electric and gas distribution systems to ensure reliability.

For regulated utilities like Alliant, the core earnings engine is rate base growth. By deploying capital into approved projects, the company can earn a regulated return, recovering costs through customer rates over time. This CapEx strategy is precisely how Alliant plans to drive future revenue requirements and earnings. The successful execution of this $13.4 billion plan and securing timely regulatory approvals for associated rate base increases will be paramount to realizing its long-term growth targets.

How Will Alliant Energy Finance Its Growth and What Are the Implications for Investors?

Financing a $13.4 billion capital expenditure plan is no small feat, and Alliant Energy has outlined a comprehensive strategy that balances debt and equity. The company plans to raise approximately $2.4 billion in new common equity between 2026 and 2029, with $1.6 billion of that still remaining to be raised. This equity component is crucial for maintaining financial flexibility, supporting its credit rating, and preventing the debt-to-equity ratio from becoming unmanageable, even as debt provides scale and tax deductibility.

However, this planned equity dilution carries implications for existing shareholders. While necessary to fund growth, increasing the number of outstanding shares can temper the translation of impressive rate base growth into per-share earnings growth. Investors will need to closely monitor the actual common equity raises against the 2026-2029 plan to assess the impact on their ownership and EPS expectations. The company is essentially using debt for growth now, but planning for future equity injections to keep its leverage in check.

Alliant's current leverage metrics show a debt-to-equity ratio of 1.63 and a Net Debt/EBITDA of 5.65. While these are within typical ranges for capital-intensive utilities, the substantial CapEx plan means these figures will be under continuous scrutiny. The company's financing cash flow is structurally positive, designed to cover any deficits and support its rising dividend. The only real liquidity risk would be a sudden, sustained inability to access debt or equity markets at favorable rates, which could force a slowdown in capital spending and, consequently, earnings growth.

The company's approach reflects a strategic trade-off: massive, structural growth requires massive, structural investment, and that costs money now. Investors should understand that Alliant is a "growth-by-capital-spending" story, not a cash-rich one. The success of this financing plan, particularly the execution of equity raises without unduly impacting EPS, will be a critical factor in the company's long-term investment appeal.

Is Alliant Energy's Operational Performance Keeping Pace with Its Growth Ambitions?

Alliant Energy's operational performance, while generally solid, is navigating the complexities of its ambitious growth strategy. The company's profitability metrics for 2025 indicate a regulated utility performing well, with a net margin of 19.1% and a return on equity (ROE) of 11.5%. These figures suggest efficient money-making, but the expansion comes with rising operational costs that demand close attention.

One notable pressure point has been elevated Operations and Maintenance (O&M) expenses. These costs are driven by planned generation maintenance, the integration of new energy resources, and higher development costs tied to longer-term growth initiatives. For instance, electric production fuel and purchased power costs climbed to $239 million in Q3 2025, up from $192 million in Q3 2024. This reflects the cost of doing business as Alliant invests heavily in new generation and manages fuel price volatility.

Furthermore, the sheer capital intensity of the $13.4 billion CapEx plan means higher depreciation and financing expenses, which pressured Q3 2025 earnings. While the company's ongoing EPS for 2025 was $3.22, it did exclude certain non-GAAP adjustments, such as a $0.05 per share asset valuation charge for its non-utility business and a $0.03 per share charge related to deferred tax assets. These adjustments are important to consider for a true picture of core operational profitability.

The regulated utility business model allows Alliant to recover these costs through rate base increases, provided they receive regulatory approvals. This mechanism is working as intended, with higher earnings primarily stemming from increased revenue requirements tied to authorized rate base increases. The company's constructive regulatory framework in Iowa and Wisconsin is a key asset, enabling it to proactively 'safe harbor' wind and storage projects to secure tax benefits and manage compliance costs. Monitoring the ongoing balance between rising costs and regulatory recovery will be crucial for investors.

How Does Alliant Energy's Dividend Growth and Valuation Stack Up for Investors?

Alliant Energy has a compelling track record for income-focused investors, boasting 21 consecutive years of dividend growth. The company recently declared a quarterly cash dividend of $0.5350 per share, translating to an annualized dividend of $2.14 per share for 2026. This represents a 5.4% increase over 2025 and an attractive forward dividend yield of approximately 3.1% at the current share price of $70.01. With a payout ratio of 62.8%, the dividend appears sustainable and well-covered by earnings, offering a reliable income stream.

From a valuation perspective, LNT trades at a trailing twelve-month (TTM) P/E ratio of 22.00, which is somewhat higher than the utility sector average but reflects its robust growth prospects. The company's P/B ratio stands at 2.46, and its P/S at 4.21. While the P/FCF of 53.09 suggests that free cash flow is currently being heavily reinvested into the business, this is a common characteristic of utilities undergoing significant capital expansion. The earnings yield of 4.5% provides a useful comparison to its dividend yield.

Analyst sentiment remains largely positive, with a consensus "Buy" rating from 23 analysts (12 Buy, 11 Hold, 0 Sell). The average analyst price target for LNT is $73.00, with a median of $73.00 and a high of $78.00, suggesting a modest upside from its current price. Recent upgrades from Barclays (Underweight to Equal Weight) and BMO Capital (Market Perform to Outperform) further underscore growing confidence in the stock's outlook.

Alliant Energy's investor profile typically appeals to those seeking stability, consistent income, and long-term growth driven by essential infrastructure investments. The combination of a strong dividend growth history, a clear path for rate base expansion fueled by data centers and renewables, and generally positive analyst coverage makes LNT an interesting proposition. However, investors should weigh the valuation against the potential for equity dilution and rising operational costs as the company executes its ambitious CapEx plan.

What's Next for Alliant Energy: Key Factors to Watch?

Alliant Energy's future trajectory hinges on several critical factors, primarily the successful execution of its $13.4 billion capital expenditure plan and the associated regulatory approvals. The company has reaffirmed its 2026 ongoing EPS guidance range of $3.36 to $3.46 per share, which at the midpoint represents 6.6% growth over 2025. This guidance is predicated on the ability of its utility subsidiaries (IPL and WPL) to earn their authorized rates of return and the realization of expected revenues from new data center demand.

Investors should closely monitor the actual pace and cost of the CapEx deployment, particularly the renewables and energy storage projects, as well as the gas infrastructure upgrades. Any delays or cost overruns could impact the targeted in-service dates and, consequently, the rate base growth that underpins future earnings. The regulatory environment in Iowa and Wisconsin will also be key; timely and favorable rate case outcomes are essential for Alliant to recover its investments and earn its authorized returns.

The company's financing strategy, specifically the planned $2.4 billion in new common equity raises between 2026 and 2029, warrants careful observation. While necessary for growth, the timing and pricing of these equity issuances will influence per-share earnings. Additionally, keeping a lid on rising operations and maintenance costs will be vital to preserving profitability and ensuring that the benefits of rate base expansion translate effectively to the bottom line.

Alliant Energy is positioning itself for a transformative period of growth, driven by unprecedented demand from data centers and a strategic shift towards clean energy. Its ability to navigate the complexities of massive capital deployment, manage financing, and secure regulatory support will determine its success in delivering on its promising long-term earnings and dividend growth targets. The story is compelling, but execution is everything.

Alliant Energy presents a compelling case for long-term investors seeking stable income and growth in the utility sector, backed by a clear strategy to capitalize on data center demand and renewable energy. While the ambitious capital plan and associated financing require diligent monitoring, the company's consistent dividend growth and positive analyst outlook suggest a promising future. Investors should weigh the potential for equity dilution against the significant rate base expansion and earnings growth expected over the next decade.

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