ALLIANT ENERGY CORP (LNT) stock intrinsic value fair value estimate & owner earnings analysis

Alliant Energy is a regulated electric and gas utility serving Iowa (Interstate Power and Light) and Wisconsin (Wisconsin Power and Light). State regulators set the prices it can charge so that it earns an allowed return on the plant it owns, which makes its profits steady but also caps them. We value what the business produces for all of its capital providers after replacing worn-out plant and before paying lenders, then subtract the debt. That matters here: Alliant owes about $11.6 billion of borrowings (about $11.0 billion of bonds and notes plus about $0.4 billion of commercial paper and $0.2 billion of finance leases) and has committed to sell about 14.6 million new shares at an average $64.44 for roughly $0.94 billion. We counted those new shares and that cash, which gives about 273 million shares and net debt of about $10.7 billion. How we measured earnings. Cash from operations (adjusted for receivables that Alliant sells, which are shown elsewhere in the cash flow statement), less working-capital swings, less stock compensation ($22 million in 2025), less the spending needed just to keep the existing system running. Utilities spend far more than that on building new plants; 2025 capital spending was $2.5 billion versus $0.85 billion of depreciation. Because most utility revenue is fuel and power passed through to customers, revenue growth is a poor guide to how much of the spending is growth, so we treated spending up to the depreciation charge as upkeep and the excess as expansion. Expansion spending is neither charged nor credited in the cases below. On that basis Alliant's earnings after interest ran $2.10 a share in 2016, $2.17 in 2020 and $2.55 in 2025, essentially flat per share for a decade because new shares were issued to fund expansion. Adding back the interest it paid ($500 million in 2025), the business produced about $1.16 billion of cash in 2025, up 12% from 2024 and up from $0.67 billion in 2016. We measure the starting level from the 2023-2025 median, about $1.04 billion, because the asset base has grown sharply since 2022 and earlier years describe a smaller utility. Prior figures we published used a different earnings definition and are not comparable. Base case, about $39 a share. Cash of about $1.15 billion in 2026 (10% above the starting level, below 2025's 12% growth), rising to $1.18 billion in 2027, then flat through 2029, then $1.24 billion from 2030 and flat afterwards. What is credited: Wisconsin's December 2025 order raising annual rates by $69 million (electric) and $7 million (gas) from January 1, 2026 and by a further $75 million and $5 million from January 1, 2027; the end of Iowa's $52 million 2025 bill credit; and Iowa's roughly $1.2 billion of plants already under construction earning a return once Iowa rates are reset after its rate freeze ends in September 2029. Why it persists: an exclusive franchise whose plant is replaced and earns a regulated return, and the first quarter of 2026 showed net income up 5%. Left out: the $13.4 billion 2026-2029 construction plan for roughly 3 gigawatts of contracted data-center demand, because its approval, cost and financing are not yet fixed, and any growth beyond the steps above. Worth about $20.4 billion as a business, less $9.7 billion owed (net debt of $10.7 billion, reduced by about $1.0 billion because most bonds carry interest well below the cost of new borrowing: $512 million of interest in 2025 on roughly $11.3 billion), leaving about $10.7 billion for shareholders. Bear case, about $23 a share. Iowa rates are frozen through September 2029 while costs rise; a two-year volume decline of the 2020 kind (revenue fell 6.4% that year); regulators lowering Wisconsin's allowed return by about one percentage point at the next review and Iowa's after the freeze (about $85 million a year); storm-hardening after events like the 2020 derecho pushing upkeep above depreciation. Cash falls to about $1.1 billion in 2026, $1.06 billion in 2027, then $0.95 billion for good. About $16.1 billion as a business, less $9.9 billion owed (refinancing of $3.7 billion maturing 2026-2030 at higher rates), leaving about $6.2 billion. Cash still covers interest (about $0.57 billion a year) 1.7 times, but this case needs lenders to keep rolling debt that is roughly ten times annual cash. Alliant's own record shows cash never falling more than about 2% in a year, so this bear case rests on regulatory and cost risks rather than a deep historical drop. Bull case, about $51 a share. Cash of $1.17 billion in 2026 and $1.26 billion by 2028 with Wisconsin earning up to its allowed ceiling, $1.36 billion from 2030 as Iowa's plants in construction earn a full return, plus about $1.3 billion of net value from the data-center building plan if approved plants are built on schedule and earn allowed returns. What could make this wrong: upkeep spending above depreciation (each extra $100 million a year would cut roughly $2 a share from all three cases); a cost-of-debt benefit smaller than assumed; or regulators approving more of the construction plan at better returns than we credit. Things we could not reconcile: the first-quarter 2026 balance sheet shows current debt maturities falling to zero from $1.07 billion, which we relied on rather than a full reading of the quarterly filing. How we set the margin-of-safety price. We are fairly sure of the current level of cash because ten years of filings show it moving within a narrow band, and the near-term rate increases are already ordered. We are less sure of the long-run level: this is a utility with about ten times its annual cash in debt, $3.7 billion maturing by 2030, a $13.4 billion plan that will need more debt and new shares, and two regulators who can lower returns; an unmodelled bad outcome would be a large storm or plant cost that regulators refuse to let Alliant recover while rating pressure raises borrowing costs, and the debt, not the franchise, would then decide shareholders' outcome. If we are wrong about upkeep spending or the debt-cost benefit, value falls toward the low-$20s. The price assumes a holding period of several years, during which the $2.14 annual dividend (the rate set in the first quarter of 2026) is paid. The margin-of-safety price is $22: at that price the dividend is about 10% of the price, and our worst case roughly equals the price, so the remaining return would have to come from the base case being realized over a few years.