Utilities Select Sector

S&P 500

The Balanced Allocator

Comparable Companies - LNT

No open-market insider purchases or sales were recorded in the last 12 months. The latest short interest is 7.5% of float with a days‑to‑cover ratio of 6.5 days. The primary institutional holders are Vanguard Group Inc (13.1%), BlackRock Inc (9.4%) and State Street Corp (6.5%).

Promoted to CEO following her initial appointment as President and COO in early 2023.

President and Chief Executive Officer

Has served as CFO since 2016, with the EVP title added in 2020.

Executive Vice President and Chief Financial Officer

Announced retirement on December 10, 2025, after 39 years of service; will remain as SVP until July 2026.

Senior Vice President of Operations

Appointed to succeed David A. de Leon as President of WPL.

President of Wisconsin Power and Light (WPL) and Vice President of Alliant Energy

Appointed to the Board of Directors, increasing board size to 11 members.

Independent Director

Retired as Executive Chairman and Chairman of the Board effective January 1, 2025.

Former Executive Chairman

Lisa Barton

Robert J. Durian

Rajagopalan Sundararajan

Manu Asthana

Carol P. Sanders

Lisa Barton's provenance is rooted in high-scale utility operations, specifically her tenure at AEP where she managed the largest transmission asset base in North America. Since taking the helm at Alliant Energy, she has successfully pivoted the company toward high-growth opportunities in the data center sector, securing 3GW of peak load commitments in 2025. Her performance is characterized by a disciplined focus on capital execution and regulatory alignment, evidenced by the 6% ongoing EPS growth achieved in 2025 despite macroeconomic headwinds. Her leadership style combines technical engineering expertise with a strategic emphasis on the clean energy transition.

Execution of Electric Service Agreements (ESAs) for Data Centers

Robert Durian represents the financial backbone of Alliant Energy, having transitioned from an accountant in 1992 to EVP and CFO. His tenure is marked by extreme financial consistency, maintaining a decade-long streak of 5%+ earnings growth. He has pioneered innovative financing structures for the utility, such as Green Bonds and equity-forward deals, which have allowed the company to fund a massive $13.4 billion capital plan without compromising the balance sheet. His deep institutional knowledge and focus on risk management make him a critical partner to CEO Lisa Barton during the current phase of rapid load growth.

Patrick E. Allen

Ignacio A. Cortina

Stephanie L. Cox

Michael D. Garcia

N. Joy Falotico

Thomas F. O’Toole

Christie Raymond

Roger K. Newport

Diversified energy holding company with regulated natural gas and electricity operations and renewable energy investments.

Consists of WE, WPS, and WG, engaged in generation and distribution of electricity and natural gas in Wisconsin; and UMERC for Upper Peninsula of Michigan.

Consists of PGL and NSG, engaged in distribution of natural gas in Illinois.

Consists of MERC and MGU, engaged in distribution of natural gas in Minnesota and Michigan.

Consists of ownership interest in ATC and ATC Holdco for transmission investments.

Consists of We Power, Bluewater, and WECI for renewable generating facilities.

Consists of holding companies and other corporate entities.

Utility holding company with regulated electric and gas operations in Pennsylvania, Kentucky, and Rhode Island.

PPL Electric Utilities Corporation providing electric service in Pennsylvania.

Louisville Gas and Electric Company and Kentucky Utilities Company providing electric and gas service in Kentucky.

RIE providing electric service in Rhode Island.

Utility holding company with regulated electric and gas utilities in New York and transmission investments.

Consolidated Edison Company of New York providing electric, gas, and steam service in New York City and Westchester County.

Orange & Rockland Utilities providing electric and gas service in New York and New Jersey.

Utility holding company with regulated electric and gas utility (PSE&G) and power generation (PSEG Power) operations.

Public Service Electric and Gas Company providing regulated electric and gas service in New Jersey.

Power generation segment with nuclear and other assets.

Alliant Energy's principal assets include the Interstate Power and Light (IPL) and Wisconsin Power and Light (WPL) generation fleets, which comprise natural-gas-fired units, wind farms, solar projects and legacy coal plants; a 347 MW natural-gas-fired unit near Sheboygan Falls, Wisconsin, and a 225 MW wind farm in Oklahoma; steam generation facilities in Cedar Rapids, Iowa (exited after 2025); a short-line rail freight operation, a Mississippi River freight terminal, and a rail-served warehouse in Iowa; and corporate headquarters in Madison, Wisconsin. Ownership is primarily direct, with the Sheboygan Falls facility leased to WPL and certain land-lease agreements for solar and wind sites.

Alliant Energy's financial trajectory features 9.6% revenue growth to $4,362 million and operating margins at 23.5% from data-center contracts and cost cuts, but aggressive $2.3 billion annual capex financed heavily by debt erodes free cash flow to -$1,108 million and yields incremental ROIC of 4.1% below the 9.5% cost of capital; while CEO Barton's utility operations expertise and board's regulatory strengths position the team well for asset management, weak capital allocation and generic incentives (net income growth weighting) undermine per-share value creation in this high-leverage environment, rendering the team adequate but not exceptional for sustained operator success.

Alliant Energy, IPL and WPL are subject to numerous environmental laws and regulations covering air emissions, water discharges, waste disposal, and renewable energy standards. They incur costs to comply and face uncertainties from regulatory changes, such as the Coal Combustion Residuals Rule, Cross-State Air Pollution Rule, and New Source Performance Standards. Potential impacts include increased compliance costs, asset retirements, and litigation.

As of December 31, 2025, Alliant Energy had 2,948 employees, IPL had 1,003, and WPL had 992. Collective bargaining agreements covered 58%, 74%, and 86% of employees, respectively.

The company discusses customer-focused investments for reliable energy solutions and public safety initiatives, but detailed disclosures on product quality, safety, or privacy are not provided.

The company operates a supply chain solutions business through Travero, including rail freight, barge terminal, and warehouse services. It also has development-ready sites for manufacturing. Supply chain risks include disruptions due to geopolitical issues, tariffs, and labor issues. Community aspects are overseen by the Board's Nominating and Governance Committee.

Revenue rose 9.6% to $4.36 bn and operating margin improved to 23.5%, yet cash‑conversion fell to 144%, free cash flow turned –$1.11 bn, leverage climbed to 165% debt/equity and incremental ROIC sits at 4.1% versus a 9.5% cost of capital, highlighting a cash‑intensive, value‑destructive investment phase.

The FY2025 capital plan of $13.4 billion, outlined in the transcript and innovation dossier, focuses on new renewable generation, energy‑storage, and natural‑gas capacity to serve the expanding data‑center load, with a 40% debt, 12% equity, and the remainder funded by operating cash, as described in the MD&A.

Impairments were limited to a $60 million Lansing Generating Station valuation charge in 2024 and a $16 million wind‑turbine‑blade recycling charge in 2025; no Critical Audit Matter was identified, indicating that the asset base is largely reliable.

The incremental ROIC reflects the returns on the $13.4 billion capex plan focused on data‑center load, renewables and storage; given the gap to cost of capital, the new investments are currently value‑destructive, as noted in the transcript’s discussion of capital efficiency.

Revolving Credit Facility (single credit facility for Alliant Energy, IPL and WPL)

Convertible Senior Notes 2026 (3.875% due 2026)

Convertible Senior Notes 2028 (3.250% due 2028)

Junior Subordinated Notes 2026 (5.75% reset, due 2056)

EV/EBITDA

Long-term equity awards with 75% performance-based; performance shares vest based on TSR, net income growth, and workforce composition over three years; service-based RSUs vest over three years; no stock options issued or outstanding.

Lisa M. Barton

Short-term incentive plan with target payouts as percentage of base salary; no individual performance modifications applied in 2024.

Mr. Cortina brings to the Board extensive experience in public policy, compliance, corporate governance, environmental and legal matters.

Mr. Garcia brings to our Board extensive operational leadership in heavy industrial industries.

Ms. Falotico brings to our Board more than 33 years’ experience across a diverse set of areas including business leadership, corporate governance, strategic planning, regulatory banking, marketing and sales, enterprise risk management, global operations and business transformations.

Ms. Cox brings to our Board more than 30 years of experience in the energy sector leading strategic planning, P&L management, human resources, manufacturing, supply chain and other functional roles for global organizations.

Mr. Allen

Mr. Cortina

Ms. Cox

Ms. Falotico

Mr. Garcia

Mr. Larsen

Mr. Newport

Mr. O’Toole

Ms. Raymond

Ms. Sanders

Election of directors for terms expiring at the 2028 Annual Meeting

Election of Directors

Approval of the advisory vote on executive compensation

Advisory Vote on Compensation of Our Named Executive Officers

Ratification of the appointment of Deloitte & Touche LLP as independent registered public accounting firm for 2025

Ratification of Appointment of Independent Registered Public Accounting Firm

Approval of the shareowner proposal requesting third-party evaluation of the Company's greenhouse gas emissions reduction targets

Shareowner Proposal

Alberto G. Ruocco

Senior VP & Chief Information Officer

David A. de Leon

Dylan Syse

Chief Accounting Officer & Controller

Executive Vice President of Strategy & Customer Solutions

Executive VP & CFO

Aimee L. Davis

Vice President of Marketing, Communications & Customer Operations

Amy E. Best

Senior VP & Chief Human Resources Officer

Amy L. Cralam

VP & General Counsel

President, Chief Executive Officer & Director

Melissa A. Kehoe

Vice President of Strategic Financial Planning & Investor Relations

Alliant Energy is a Midwest U.S. energy holding company whose primary wholly-owned subsidiaries are Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL). The company provides regulated electric and natural gas service to approximately 1,010,000 electric customers and 435,000 natural-gas customers in Iowa and Wisconsin. Non-utility holdings include Travero (rail and barge freight), a non-utility wind farm, corporate venture investments, the Sheboygan Falls Energy Facility, and other assets organized under Alliant Energy Holdings (AEF).

IPL is a regulated public utility that generates and distributes electricity and distributes and transports natural gas to retail customers in Iowa. At December 31, 2025, IPL served approximately 505,000 electric customers and 230,000 natural-gas customers.

WPL is a regulated public utility that generates and distributes electricity and distributes and transports natural gas to retail customers in Wisconsin. At December 31, 2025, WPL served approximately 505,000 electric customers and 205,000 natural-gas customers.

Held base growth, terminal multiple 10.7x and WACC 9.5% constant, solved for average FCFF as % of 7334 tangible book.

Balance Sheet - Supplemental

Balance Sheet

Cash Flow Statement - Supplemental

Cash Flow Statement

Income Statement - Supplemental

Income Statement

Ratios

Valuation

Historical Ratios & Multiples - LNT

The utility industry is currently in an accelerating capital cycle, with sector-wide investments in grid modernization and renewable integration. While demand growth from data centers is a genuine tailwind, Alliant Energy is outperforming its peers in capital intensity (52.2% vs 36.4% peer median) but underperforming in revenue growth (9.6% vs 12.4% peer median), suggesting it is over-investing relative to its size.

Alliant Energy is relevant for analysis now because it has just affirmed a massive 17% increase in its capital plan, while its stock price is trading near 52-week highs despite deteriorating cash flow and leverage metrics.

Equity Issuance via ATM Program Alliant Energy has identified $2.4 billion in common equity needs through 2029. As the company taps its At-The-Market (ATM) program to fund the $13.4 billion capital plan, the resulting EPS dilution will likely force a downward revision of consensus estimates.

Credit Rating Downgrade With net leverage at 5.7x and interest coverage at 2.3x, the company is at the edge of its investment-grade ratings. A further downgrade from S&P or Moody's would increase financing costs and signal to the market that the capital plan is over-extended.

Regulatory Pushback on Data Center Rates There is a risk that regulators in Iowa or Wisconsin will balk at the massive capital expenditures required to serve data centers, potentially limiting cost recovery or imposing 'ring-fencing' that prevents retail customers from subsidizing industrial growth.

Interest Rate Volatility As a highly levered Asset-Based Operator with $12.1 billion in debt, Alliant is extremely sensitive to interest rates. A 'higher for longer' environment would compress the spread between its ROIC (3.6%) and its cost of debt, further eroding equity value.

The stewardship verdict is adequate but uninspiring. While the board has deep regulatory and energy sector expertise, the lack of meaningful insider ownership (0.1%) and the use of generic incentive metrics like 'net income growth' (35% weighting) rather than ROIC or per-share FCF suggests a lack of alignment with long-term value creation. The governance structure is standard for a large utility, but it has not pr...

The current asset base consists of a massive regulated utility infrastructure across Iowa and Wisconsin, including 8,440 MW of owned generating capacity (comprising gas, wind, solar, and coal), extensive electric distribution lines, gas mains, and energy storage systems. Per P7 Transcript Analysis, the footprint has recently expanded with 275 MW of new energy storage and the execution of 3 GW of data center Energy Service Agreements (ESAs), which significantly enhances the strategic value of existing land and transmission rights. Non-utility assets include the 347 MW Sheboygan Falls gas facility and Travero’s rail, barge, and warehouse operations.

Secondary market transactions for operational utility-scale solar and wind assets in the MISO region have averaged between $1,100,000 and $1,400,000 per MW.

Sales of regulated transmission and distribution utilities typically command 1.2x to 1.5x of Net Book Value in M&A; however, orderly liquidation scenarios for infrastructure typically see bids at 50% to 70% of book value to account for regulatory transition risks.

Cash & Equivalents

Accounts Receivable

Alliant Energy's inventory is dominated by materials and supplies necessary for maintaining a multi-state grid. With a book value of $288,000,000 and a turnover of 6.22x, the inventory is fresh. The liquidation logic separates the highly fungible fuel (coal/gas) from the specialized transformers and meters. The base recovery of 65% is standard for the utility sector, where the bulk of the value is tied up in high-quality, albeit specialized, infrastructure components.

Inventory

Other Current Assets

Net PP&E

Long-Term Inv.

Other Non-Current

Accounts Payable

Current Debt

Other Current Liabilities

Non-Current Debt

Tax Liabilities (Deferred)

Other Non-Current Liabilities

Alliant Energy price target raised to $73 from $70 at Mizuho

Alliant Energy price target raised to $75 from $71 at Wells Fargo

Alliant Energy upgraded to Equal Weight at Barclays amid data center upside

Alliant Energy price target lowered to $75 from $79 at UBS

Alliant Energy (LNT) PT Raised to $76 at Wolfe Research

Alliant Energy (LNT) PT Raised to $78 at Jefferies

Alliant Energy price target raised to $71 from $68 at BMO Capital

Alliant Energy initiated with an Overweight at Wells Fargo

Alliant Energy price target raised to $65 from $60 at Barclays

Alliant Energy price target raised to $74 from $71 at UBS

Situation: Current price is $71.34 versus fair value $48.25 (-32.4% expected return), and valuation confidence is stable. Debate: Bull case depends on Equity Issuance via ATM Program Alliant Energy has identified $2.4 billion in common equity needs through 2029. Bear case centers on Regulatory Pushback on Data Center Rates There is a risk that regulators in Iowa or Wisconsin will balk at the massive capital expenditures required to serve data centers, potentially limiting cost recovery or imposing 'ring-fencing' tha... Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.

Executive Summary

Alliant Energy is currently in a peak capital cycle, with capital expenditures reaching 52.2% of revenue to support data center load growth. However, this growth is being financed through significant debt and projected equity issuances that yield returns well below the company's cost of capital, leading to a deteriorating free cash flow profile.<ul><li>Driver: Sub-cost-of-capital reinvestment cycle</li><li>Catalyst: Equity dilution and credit rating pressure</li><li>Protection: Regulated monopoly status</li></ul>Our variant perception is that the market is obsessing over the 3 gigawatt data center pipeline, missing the reality that this is a capital-intensive utility story where the aggressive reinvestment is actually value-destructive. We view this not as a high-growth technology play, but as an asset-heavy operator whose current share price has decoupled from the underlying cash-generating capacity of its regulated asset base, which currently yields a trailing ROIC of only 2.5%.This is a valuation-driven exit or short-bias recommendation on a regulated utility where the primary bet is that the market will eventually re-rate the stock downward as the financial strain of the $13.4 billion capital plan-specifically the negative free cash flow of $1.1 billion-becomes impossible to ignore.

Core Investment Rationale

Alliant Energy operates as a regulated utility holding company, providing electricity and natural gas to approximately 1 million retail customers across Iowa and Wisconsin. The company's strategy has pivoted sharply toward supporting hyperscaler data center growth, utilizing its 'Alliant Energy Advantage' to secure large-scale Energy Service Agreements (ESAs). Revenue is primarily derived from regulated rate structures, which provided $4.36 billion in total revenue for FY2025, a 9.6% increase year-over-year. The business model relies on continuous regulatory approval for capital investments, which are then recovered through customer rates with an allowed return on equity.The core of the business is a massive $20.3 billion net property, plant, and equipment (PP&E) base. This includes 8,440 megawatts of owned generating capacity across natural gas, wind, solar, and legacy coal assets. Key strategic assets include the newly commissioned 1.5 gigawatt solar fleet and 1.8 gigawatt wind fleet, alongside the 720 megawatt Bobcat Energy Center. The company also operates a short-line rail freight service and a Mississippi River barge terminal through its Travero subsidiary, though these represent a small fraction of the total asset value.As a regulated utility, Alliant Energy operates as a legal monopoly within its defined service territories in Iowa and Wisconsin. Competition is primarily for industrial load and economic development projects rather than retail customers. The company is smaller than regional peers like WEC Energy Group (market cap $37.8B) and Public Service Enterprise Group (market cap $41.9B), which puts it at a relative disadvantage in terms of capital scale, though its 3 gigawatt data center pipeline is currently among the most aggressive in the mid-tier utility space.The historical situation is defined by a rapid transition from a traditional coal-heavy generation fleet to a modernized, data-center-centric infrastructure. Over the last five years, the asset base has evolved through the retirement of legacy plants like the Lansing Generating Station and the massive build-out of renewable capacity. However, this transition has been heavily debt-financed, with total debt rising to $12.1 billion by the end of 2025. The current situation is marked by a leadership transition to CEO Lisa Barton, who has accelerated the focus on hyperscalers. While management has delivered 22 consecutive years of dividend increases, the financial cost of this growth is now manifesting in a Debt/Equity ratio of 165% and interest coverage that has slipped to 2.3x, signaling that the company is reaching the limits of its current capital structure.

Business & Situation

<ul><li>Bull Case: The 3 gigawatt data center pipeline represents a 50% increase in peak demand by 2030, providing a clear runway for rate base growth. Management has a proven track record of regulatory execution, consistently achieving 5-7% earnings growth through disciplined rate case settlements.</li><li>Bear Case: Incremental ROIC of 4.1% is far below the 9.5% cost of capital, meaning every dollar of new investment is destroying shareholder value. The $13.4 billion capital plan is driving free cash flow deep into negative territory (-$1.1 billion in 2025), necessitating $2.4 billion in new equity that will dilute existing shareholders.</li></ul>The prevailing market narrative is that Alliant Energy is a 'safe' way to play the AI and data center boom. Investors are paying a premium for the company's contracted 3 gigawatt load, assuming that the regulated nature of the business guarantees profitable growth and dividend safety. This narrative is supported by recent analyst target upgrades to the $75-$78 range, which focus on the 7% earnings CAGR target and ignore the deteriorating balance sheet metrics.The utility industry is currently in an accelerating capital cycle, with sector-wide investments in grid modernization and renewable integration. While demand growth from data centers is a genuine tailwind, Alliant Energy is outperforming its peers in capital intensity (52.2% vs 36.4% peer median) but underperforming in revenue growth (9.6% vs 12.4% peer median), suggesting it is over-investing relative to its size.Our differentiated view is that the market is mispricing the quality and stability of the asset's cash flows. While the data center contracts are 'contracted,' the capital required to serve them is so great that it has pushed the company into a value-destructive phase. The market is treating LNT as a growth stock, but its ROIC of 3.6% trails the peer median of 4.2%, and its incremental ROIC of 4.1% confirms that new projects are not earning their cost of capital. This 'growth' is being bought with expensive debt and dilutive equity, which will eventually force a re-rating as the FFO-to-debt cushion tightens toward the 50-100 basis point target management has disclosed.The debate between 'data center growth' and 'financial strain' will likely be resolved by the company's need for capital. With $1.3 billion in equity still to be raised through 2029 and a debt load that has already triggered an S&P downgrade to BBB+, the financial reality will eventually overwhelm the growth narrative.Our analytical edge is a more detailed understanding of the capital cycle and reinvestment efficiency. By focusing on the spread between incremental ROIC (4.1%) and WACC (9.5%), we can see the value destruction that is masked by GAAP earnings growth, providing a clearer picture of intrinsic value than the market's focus on top-line load growth.

Core Thesis

CEO Lisa Barton, who took the helm in early 2024, brings significant experience from American Electric Power where she managed an $18 billion transmission asset base. While her operational pedigree is strong, her tenure at Alliant has been characterized by an aggressive expansion of the capital plan that has yet to translate into improved capital efficiency. CFO Robert Durian has been with the company since 1992 and is viewed as a stabilizing force, though he is overseeing a period of record-high leverage.Capital allocation skill is currently weak. While management has maintained the dividend (22nd consecutive increase), they have done so while generating negative free cash flow of $1.1 billion and allowing net leverage to rise to 6.2x. The decision to pursue a $13.4 billion capex program with sub-cost-of-capital returns suggests a focus on absolute growth over per-share value creation.Management's communication is polished but contains contradictions. They emphasize 'robust cash generation' in earnings calls, yet the financial statements show cash conversion falling from 169% to 144% and a deeply negative free cash flow profile.<ul><li>Board Independence: 89% (8 of 9 directors are independent)</li><li>Chairman/CEO Roles: Separate (Independent Chair as of 2025)</li><li>Chairman Tenure: Carol P. Sanders has served since 2005</li><li>Insider Ownership: 0.1% (Group total of 252,256 shares)</li><li>Shareholder Rights: Declassified Board, No Hedging/Pledging Policies</li></ul>The stewardship verdict is adequate but uninspiring. While the board has deep regulatory and energy sector expertise, the lack of meaningful insider ownership (0.1%) and the use of generic incentive metrics like 'net income growth' (35% weighting) rather than ROIC or per-share FCF suggests a lack of alignment with long-term value creation. The governance structure is standard for a large utility, but it has not prevented the current shift into a value-destructive capital cycle.

Leadership & Governance

The valuation floor is anchored to the Net Liquidation Value (NLV) of $0.00. Given the company's high debt load of $12.1 billion and the specialized, non-portable nature of its utility assets, a distressed liquidation would likely result in zero equity recovery after satisfying all senior debentures and tax liabilities.The base case assumes 5.5% revenue growth and stable 23.5% operating margins as the data center load begins to ramp. However, continued high capex of $2.3 billion annually keeps free cash flow negative, leading to a fair value of $48.25 based on historical and peer multiples.The bull case assumes a data center super-cycle where the 3 gigawatt load ramps ahead of schedule and regulatory settlements allow for higher ROEs, leading to a 'Blue-Sky Potential' of $76.00.The bear case is anchored to the Net Liquidation Value (NLV) from the Liquidation Value Analysis. In a scenario where rising interest rates and regulatory pushback on data center rates impair the asset base's cash-generating capacity, the high debt load provides no equity cushion, making the ultimate downside risk a total loss of equity value in a restructuring.

Valuation Context

<ul><li>Equity Issuance via ATM Program Alliant Energy has identified $2.4 billion in common equity needs through 2029. As the company taps its At-The-Market (ATM) program to fund the $13.4 billion capital plan, the resulting EPS dilution will likely force a downward revision of consensus estimates.</li><li>Credit Rating Downgrade With net leverage at 5.7x and interest coverage at 2.3x, the company is at the edge of its investment-grade ratings. A further downgrade from S&P or Moody's would increase financing costs and signal to the market that the capital plan is over-extended.</li><li>Alliant Energy is relevant for analysis now because it has just affirmed a massive 17% increase in its capital plan, while its stock price is trading near 52-week highs despite deteriorating cash flow and leverage metrics.</li></ul>Alliant Energy is relevant for analysis now because it has just affirmed a massive 17% increase in its capital plan, while its stock price is trading near 52-week highs despite deteriorating cash flow and leverage metrics.

Catalyst Path & Context

<ul><li>Regulatory Pushback on Data Center Rates There is a risk that regulators in Iowa or Wisconsin will balk at the massive capital expenditures required to serve data centers, potentially limiting cost recovery or imposing 'ring-fencing' that prevents retail customers from subsidizing industrial growth. The company's capex/revenue intensity is 52.2%, significantly higher than the 36.4% peer median, increasing the visibility and political sensitivity of rate increases.</li><li>Interest Rate Volatility As a highly levered Asset-Based Operator with $12.1 billion in debt, Alliant is extremely sensitive to interest rates. A 'higher for longer' environment would compress the spread between its ROIC (3.6%) and its cost of debt, further eroding equity value. Interest expense rose to $511 million in 2025, and the company plans $1.2 billion in new debt financing for 2026.</li><li>The stewardship verdict is adequate but uninspiring. While the board has deep regulatory and energy sector expertise, the lack of meaningful insider ownership (0.1%) and the use of generic incentive metrics like 'net income growth' (35% weighting) rather than ROIC or per-share FCF suggests a lack of alignment with long-term value creation. The governance structure is standard for a large utility, but it has not pr... Risk monitor: Current price $71.34 vs fair value $48.25, expected return -32.4%.</li></ul>

Primary Risks

<ul><li>Entry Target: No new entries: recommendation is Sell.</li><li>Stop Loss: No stop-loss needed because recommendation is Sell (no position).</li><li>Position Size: Position size is None under current recommendation and risk constraints.</li><li>Time Horizon: N/A for a Sell recommendation.</li></ul><ul><li>Management confirmed $1.3 billion in remaining common equity needs through 2029 in the FY2025 Q4 earnings call.</li><li>S&P Global Ratings already downgraded the company to BBB+ in March 2025 citing weak financial metrics.</li><li>The company's capex/revenue intensity is 52.2%, significantly higher than the 36.4% peer median, increasing the visibility and political sensitivity of rate increases.</li></ul>A permanent and significant decrease in interest rates combined with a regulatory ruling that allows for a 100+ basis point increase in allowed ROE, which would make the current capital plan accretive rather than value-destructive. Also require valuation reliability to improve before re-entering.

Actionable Parameters & Monitoring

LNT appears overvalued (fair value $48.25 vs current $71.34, expected return -32.4%). Recommendation: Sell; do not allocate until valuation and risk profile reset.

Final Conclusion

Driver

Equity dilution and credit rating pressure

Catalyst

Protection

The 3 gigawatt data center pipeline represents a 50% increase in peak demand by 2030, providing a clear runway for rate base growth. Management has a proven track record of regulatory execution, consistently achieving 5-7% earnings growth through disciplined rate case settlements.

Bull Case

Incremental ROIC of 4.1% is far below the 9.5% cost of capital, meaning every dollar of new investment is destroying shareholder value. The $13.4 billion capital plan is driving free cash flow deep into negative territory (-$1.1 billion in 2025), necessitating $2.4 billion in new equity that will dilute existing shareholders.

Bear Case

Situation: Current price is $71.34 versus fair value $48.25 (-32.4% expected return), and valuation confidence is stable. Debate: Bull case depends on Equity Issuance via ATM Program Alliant Energy has identified $2.4 billion in common equity needs through 2029. Bear case centers on Regulatory Pushback on Data Center Rates There is a risk that regulators in Iowa or Wisconsin will balk at the massive capital expenditures required to serve data centers, potentially limiting cost recovery or imposing 'ring-fencing' tha... Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.

The strategy evolved from a broad clean energy transition and general economic development focus to a hyperscaler data center-driven growth model, with capital allocation and regulatory strategy explicitly tailored to support this high-margin load.

Method	Implied Value	Weight	Weighted Value
Comps	$45.78	65%	$29.76
Historicals	$52.85	35%	$18.50
Total Weighted			$48.25

LNT

Company Overview

Price History