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Alliant Energy Gains From Diverse Customer Mix, Investments

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Alliant Energy (LNT - Free Report) and its subsidiaries are engaged in regulated electric and natural gas services. Alliant Energy’s investment in regulated natural gas and renewable energy assets, along with diverse customer mix will continue to drive its performance.

We recently updated a research report on this Zacks Rank #3 (Hold) stock. The adverse impact of the COVID-19 pandemic and increasing competition in its service territories are headwinds.

Tailwinds

Alliant Energy’s earnings prospects look attractive due to ongoing additions to electric and natural gas customer volumes. In addition, a diverse customer mix provides stability to sales as the company does not depend on a single customer group for revenues.

It announced plans to invest substantially over the next four years to strengthen the electric and gas distribution network, as well as add natural gas and renewable assets to the generation portfolio. The company has plans to strengthen electric and natural gas distribution systems, as well as make regular investments to strengthen infrastructure.

Alliant Energy is consistently investing in renewable and natural gas-based electricity generation, as well as gradually reducing coal-based generation assets. Stringent emission standards are forcing utilities to lower their dependence on coal-fired production units. The company announced the voluntary goal of retiring all the existing coal-fired generation units by 2040, with an objective of lowering emissions from 2005 levels by 50% and 100% within 2030 and 2050, respectively.

Headwinds

Alliant Energy is exposed to increased competition from self-generation by large industrial customers, customer- and third party-owned generation (e.g. solar panels), as well as alternative energy sources, which can lower the demand for its services in Iowa and Wisconsin.

The company’s retail electric sales for the second quarter were down 6% from the last year, reflecting the COVID-19 pandemic’s impacts. Increase in residential load was not enough to offset the decline in demand from the commercial and industrial (C&I) group.

Price Performance

Shares of Alliant Energy have gained 3.8% against the industry's 9.6% decline in the past 12 months.

Stocks to Consider

Some better-ranked stocks in the same sector include Essential Utilities Inc. (WTRG - Free Report) , UGI Corporation (UGI - Free Report) and Pampa Energia S.A. (PAM - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Essential Utilities’ long-term (three to five years) earnings growth rate is pegged at 6.01%. Also, the company has a trailing four-quarter earnings surprise of 9.67%, on average.

UGI Corp. delivered an earnings surprise of 153.3% in the last reported quarter. The Zacks Consensus Estimate for fiscal 2020 earnings has moved 12.9% upward to $2.54 in the past 60 days.

Long-term earnings growth rate for Pampa Energia is pegged at 6.5%. Also, the company has a trailing four-quarter earnings surprise of 153.99%, on average.

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