Alliant Energy Corporation (LNT)

Total return at 5 years: 5.5%/year = 2.0% appreciation + 3.6% dividend. The target price ($75) is ex-dividend; the $13 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $94 · Multiples $71) exceeds the market price ($68).

Today — fairly valued: at $68 trades ~4.5% below its value discounted to today (~$71); the discount is positive but does not reach the margin of safety we require (≥38%).

At 5 years — En valor: the target price ($75) plus dividends yield between the 4% floor and the 10% average return — a reasonable return, though without the margin of a great investment.

The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$46.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($68) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-0.7%/year) than we project (6.5%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$0.8 bn of owner earnings in year 5 (vs ~$1.1 bn of our base case). It recalculates if the DCF assumptions are edited.

A regulated utility is valued on P/E over adjusted earnings (equity-level): the value sits in the regulated base (rate base), which grows with capex at an allowed ROE. GAAP can be depressed by the mark-to-market of hedges → the adjusted figure is used. It returns capital via dividend (a dividend aristocrat); it may issue some equity to fund capex. Total return adds the dividend collected along the way. In edit mode, the metric, shares, dividend, and exit multiple can be adjusted.

Year 0 (TTM) is rebased to June 2026 from the Q2'26 earnings 8-K (Jul 30, 2026, Item 2.02), because the XBRL as of that date had not yet ingested that quarter (its most recent fact is from May 1, 2026): TTM = FY2025 ($810M) + H1 2026 cumulative ($394M) - H1 2025 cumulative ($387M) = $817M, and similarly for revenue, EBIT, D&A, and taxes, all by levels from the 8-K itself. Year 1 starts at ~8% EPS growth, just above the midpoint of reaffirmed 2026 recurring EPS guidance ($3.36-3.46, with the company indicating a trend toward the upper half of the range after the first half), and decelerates smoothly toward ~6% in year 5, within the utility terminal growth band (3-6%, taking the high end given data center demand). Consolidated earned ROE (~11.1% over the trailing twelve months) exceeds the authorized retail-level range (IPL 9.34%, WPL 9.80%) due to the contribution from equity stakes in ATC and Alliant Energy Finance's unregulated businesses. The rate base driver combines IPL's electric rate base excluding CWIP ($7,279M, 2025 test period) and WPL's ($6,234M, 2026 test period), growing with the guided capital plan (~$3,130M consolidated in 2026). Shares grow ~1.5% annually across all three scenarios (modest issuance to fund the capital plan, with no buyback or capital-return policy via buyback — §6, single path).

Today's multiple compresses on its own going forward as the metric per share grows. The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—. Total return adds the dividend collected; the required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $75 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $68, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $75 in 5 years plus $13 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $71. Against the current market price ($68), the margin of safety is 4.5% (trades below the maximum → there is margin) and the total return at that price would be 5.5% annually.

• Entry multiple. The stock trades at a TTM P/E of ~21x on net income attributable rebased to June 2026, above the ceiling of the utility band of 15-18x on today's metric.
• Compression toward year 5. The entry multiple compresses as EPS grows toward and beyond guidance, approaching the utility band over the 5-year horizon.
• Dividend yield. The current annualized dividend of $2.14 per share represents a yield of ~3.1% at the market price, with recent growth of ~5.4% annually.
• Limited margin of safety. The market price leaves a modest margin of safety against the base-case 5-year value, typical of a quality utility already recognized by the market.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✓ ROIC exceeds the cost of capital (~10%)
• ✕ CFROIC backs up the ROIC (58%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Return on capital above the 10% bar. Consolidated ROE of ~11.1% over the trailing twelve months, above the method's absolute quality bar and above the authorized retail range.
• Regulatory predictability. Recovery of investment through rates gives high predictability to cash flow, though with a regulatory lag between the investment and its recognition in rates.
• Cash generation strained by capex. Reported free cash flow is negative (~-$0.34 billion over the trailing twelve months) due to the pace of the investment plan, financed with debt.
• Negative effective tax rate. The consolidated effective rate is negative (~-27% over the trailing twelve months) due to renewable energy tax credits, a cash benefit currently in effect but subject to changes in fiscal policy.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

Alliant Energy's electric and gas drivers are, above all, about regulated base expansion: profit growth does not come from raising the price per unit sold but from investing capital in generation, storage, and distribution that Iowa and Wisconsin regulators recognize in rates. The customer count grows organically (~1-1.5% annually); the real driver is capex, currently guided at ~$3.1 billion annually, supported by demand from three data centers with executed agreements totaling ~3 GW of aggregate peak demand.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Reaffirmed guidance. 2026 recurring EPS guided at $3.36-3.46, with the company trending toward the upper half of the range after the first half.
• Expanding rate base. The 2026 consolidated capital plan of $3,130 million sustains growth of IPL's and WPL's regulated base, currently at ~$13.5 billion combined in the electric segment.
• Stable residential and industrial demand. Retail electric sales grew modestly in volume in the first half of 2026, with EPS growth mainly explained by rate base rather than volume.
• Weather sensitivity. Temperature impacts reduced second-quarter 2026 operating income by $11 million versus a $6 million benefit a year earlier.

• Regulated franchise. Territorial monopoly in electric and gas distribution in Iowa and Wisconsin, with no option for the retail customer to switch providers.
• Cost recovery through rates. Fuel adjustment mechanisms pass fuel cost through to the customer, insulating the regulated business margin from natural gas volatility.
• Data center demand growth. Three data centers with executed service agreements totaling ~3 GW of aggregate demand support the 60% load growth guided through 2031.
• Limited unregulated exposure. ATC, the wind farm, and Travero contribute a smaller portion of profit outside the tariff framework, without dominating the consolidated result.
• IPL base rate moratorium. IPL cannot file a new retail electric base rate case until September 2029, which limits the speed of recovering new investment in that business.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✓Regulated return (earned vs allowed ROE)Earns 11.1% vs allowed 9.8%
• !Value creation (allowed ROE − 10% bar)-0.2pp
• !Leverage (net debt / EBITDA)6.5x · Not available in the data extracted for this analysis
• ✓Predictability (% regulated + rate-base growth)92% regulated · rate base +$3.1 bn/year

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Elevated leverage. Consolidated gross debt of ~$12.1 billion against common equity of ~$7.5 billion (net debt/EBITDA ~6.5x), typical of a utility in an intensive investment phase.
• Minimal cash. Cash and equivalents fell to $25 million at the close of June 2026 from $556 million at the end of 2025, offset by commercial paper lines and other short-term borrowings.
• Access to capital markets. The company continues to access short-term financing (commercial paper, other borrowings) and modest equity issuance to sustain the capital plan.
• Regulated capital structure. The common equity ratio to total capital (~38%) is consistent with the capital structure recognized by Iowa and Wisconsin regulators when setting rates.
• S&P 500 component. Alliant Energy is an S&P 500 component, with broad access to institutional investors and market liquidity.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Leadership. Lisa Barton became President and CEO in January 2024 after serving as COO since 2023, with prior experience as COO and EVP of Utilities at American Electric Power.
• Capital plan execution. 2026 recurring guidance was reaffirmed, with the company indicating a trend toward the upper half of the range, a sign of execution in line with commitments.
• Dividend policy. The quarterly dividend rose from $0.5075 to $0.535 (+5.4%) between 2025 and 2026, consistent with the goal of sustaining the payout ratio.
• Growth financing. The capital plan is financed through a combination of debt, commercial paper, and modest equity issuance ($70 million net in the first half of 2026), modestly diluting the existing shareholder.

• Limited analyst coverage compared to larger-cap utilities in the sector, despite being an S&P 500 component.
• The market tends to anchor the multiple to historical EPS growth (~mid-single-digit) without yet fully pricing in the acceleration of data center demand guided for 2026 onward.
• Elevated leverage and negative reported free cash flow generate a superficial reading of financial risk that a deeper look at the regulatory structure qualifies.

The second-quarter 2026 earnings 8-K reaffirms guidance and does not introduce a new catalyst: the thesis adjustment comes from rebasing the TTM with data as of June 30, 2026 instead of the prior XBRL window as of March 31, 2026, not from a fundamental change in the business.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at ~0%/year (-2% total): the margin of safety protects the downside. The bull (+9%/year, +55% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Data center concentration. Capital committed to generation and transmission for three data centers (~3 GW) could be left without the corresponding revenue if demand is delayed or canceled.
• Regulatory risk. The IUC and PSCW set rates and the authorized return; IPL has a retail electric base rate moratorium in effect until September 2029.
• Renewable tax credits. The One Big Beautiful Bill Act accelerates the phase-out of production and investment credits for renewables and limits their transferability, with potential impact on the accumulated tax position.
• Federal regulatory uncertainty (GHG). The EPA's review of its 2009 greenhouse gas finding creates uncertainty over the retirement schedule for coal plants and the need for new fossil generation.
• Dependence on capital markets. The ~$3.1 billion annual investment plan depends on continued access to debt and equity markets on competitive terms.
• Operating climate risk. Atypical temperatures reduced second-quarter 2026 operating income by $11 million.
• Counterparty risk from large customers. The credit of large load customers (including data centers) is a new counterparty risk for the utility's traditionally residential/commercial profile.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  A wide moat and ROE 11% above the 10% bar, but the margin is limited (+5%) → excellent business at a fair price.

• Peter Lynch Growth at a reasonable price (GARP)

  A stalwart growing 7% at a PEG of 3.3 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Not applicable — the Magic Formula excludes financials and regulated businesses (EBIT/EV does not capture the operating leverage).

• Howard Marks Perception vs reality + cycle

  The price discounts -1% vs our 7%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor -4%/yr, bull-scenario ceiling +6%/yr over 5y: reasonable asymmetry, without an ample cushion.

• Pat Dorsey Moat strength (Five Rules)

  A wide moat, stable; sources: intangibles, efficient scale, cost advantage, switching costs → passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -1%, within what we project (7%) — the story squares with the numbers.