Alliant Energy Corporation (LNT)

FairStock Score: 43/100 — MIXED

Key Financials

Strengths

• Regulated utility business model with predictable, recurring revenue streams and regulatory protection
• Low volatility profile with beta of 0.61, suitable for conservative portfolios
• Decent operating margin of 13.35% in latest quarter demonstrates pricing power
• Established presence across Iowa, Illinois, and Minnesota with 2,948 employees
• Recently stable stock price within $57-$72 range suggests market consolidation

Concerns

• Severely negative free cash flow of -$1.4B indicates the company is consuming rather than generating cash
• Alarming Piotroski F-Score of 3/9 signals deteriorating financial condition and operational stress
• Altman Z-Score of 0.91 suggests distress zone, combined with 1.68 D/E ratio creates leverage risk
• Grotesque valuation disconnect: trading at 3.8x Graham Number with 69.54x EV/EBITDA—no margin of safety exists
• Dismal capital efficiency with ROCE of only 2.64% and ROE of 11.3% well below cost of capital

AI Analysis

Alliant Energy presents itself as a classic defensive utility, but the financials reveal troubling undercurrents beneath the regulated surface. Yes, utilities offer predictable cash flows and durable competitive moats through regulatory barriers—precisely what Graham sought. The 0.61 beta confirms low volatility, and the modest size of $18.4B suggests reasonable stability in the Midwest markets it serves. However, I'm deeply concerned about the operational health here. The Piotroski F-Score of 3/9 is abysmal—this indicates deteriorating financial condition. The negative free cash flow of -$1.4B is a red flag I cannot ignore. A utility burning cash rather than generating it suggests either massive capital expenditures without offsetting earnings, or fundamental operational stress. The Altman Z-Score of 0.91 whispers bankruptcy risk. When combined with a debt-to-equity ratio of 1.68, this company is financially leveraged beyond what I find comfortable. The Graham Number valuation of $18.79 versus the current price of $71.61 represents a margin of safety that's catastrophically negative—we're paying 3.8 times what intrinsic value suggests. The EV/EBITDA of 69.54 is extraordinarily expensive for a mature utility. While the latest quarter showed an acceptable 13.35% margin, this snapshot doesn't offset the macro deterioration. The company's modest ROE of 11.3% and abysmal ROCE of 2.64% tell me capital isn't being deployed efficiently. I'd pass on this investment. Safety and margin of safety are paramount—both are absent here.

Bull Case

Regulated utilities are recession-resistant income generators with durable moats and rate-setting power. Infrastructure investment requirements could support long-term dividend growth if the company stabilizes cash flow through rate increases and operational improvements.

Bear Case

The negative free cash flow combined with high leverage and deteriorating financial metrics (F-Score 3/9, Z-Score 0.91) suggest the company may struggle to maintain current capital structure. Valuation is divorced from fundamentals, offering no cushion for regulatory or operational disappointments.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer