Alliant Energy Corporation

▲ Bull Case

• ◆Iowa's 'no rate case through end of decade' commitment eliminates the #1 execution risk for utilities in a heavy capex cycle — capital recovery via annual mechanisms means LNT's $13.4B program earns its allowed ROE (~10%) without 2–4 year regulatory lag, mathematically locking in 6% EPS growth and driving rate base from ~$15–16B (FY2025) to ~$22B (FY2028E), adding ~$600–700M in incremental regulated income annually.
• ◆5 executed ESAs totaling 3.4 GW represent contractual, diversified, hyperscaler-grade load already materializing — Q1 2026 peak demand >60% YoY growth confirms ramp; additional ESA signings (6th, 7th) or acceleration beyond 3.4 GW would push bull-case EPS to $4.50+ by FY2028 and re-rate the stock toward $96 (bull case) at 21x, vs. PWFV of ~$78.80.
• ◆Best-in-class dividend growth (5–7%/yr, matching EPS growth) supported by Iowa's earnings certainty, with yield growing from 2.8% (FY2025 at $71.45) to 3.4% (FY2028E) — income component is meaningful, growing, and has zero payout cut risk in any reasonable scenario, providing total return of ~18.5% to PWFV even before multiple expansion.

▼ Bear Case

• ◆Interest rate sensitivity is the primary bear driver — UST +100bps compresses P/E from 21x to 17–18x, implying a $10–15 stock decline with no change in fundamentals; if 10-yr UST rises and sustains above 5.5% for two consecutive quarters, the appropriate action is to pause new purchases and wait for either rates to normalize or the stock to reach $58 (bear case priced in).
• ◆ESA load ramp is weighted toward FY2027–2029, creating an ~18-month earnings-contribution gap — FY2026 EPS growth (~6%) is already in the stock, and investors must hold through a period where the data center narrative is not yet fully visible in reported earnings, creating vulnerability to sentiment shifts or macro-driven multiple compression.
• ◆Wisconsin PSCW rate case (FY2026–2027) for WPL (~35–40% of LNT earnings) introduces regulatory uncertainty — a below-expectations outcome (<$150M new annual revenue) combined with rejection of the ESA cost recovery framework would trim FY2027E EPS by $0.10–0.20/share and raise residential ratepayer subsidy concerns that could spill into Iowa's political environment.

“The central Wall Street debate on LNT is whether its 21x forward P/E (a 25–35% premium to the utility sector) is justified by Iowa's structural regulatory certainty and 3.4 GW of executed ESAs, or whether the multiple already fully prices the Iowa advantage leaving limited upside. Bulls argue Iowa's no-rate-case commitment is a unique, durable moat that should command a permanent premium — with ESA acceleration as the re-rating catalyst toward $96 (bull case). Bears counter that the GGM at 4.0% terminal dividend growth implies the market has already largely credited Iowa's advantages, that interest rate normalization (UST back toward 5%) could compress the multiple to 16–17x regardless of fundamentals, and that the 2027–2029 earnings ramp from ESAs requires 2–3 years of patience. A secondary debate concerns ESA execution risk: while 5 signed ESAs are more diversified than peers, hyperscaler AI capex prioritization shifts remain possible, and any single >500 MW cancellation would test the narrative. The transcript-unavailable limitation means the current state of management's commentary on MW metered vs. contracted and the Iowa IUC wind filing timeline is unconfirmed.”

• ◆Q2 2026 earnings (August 2026): first major data center load update — peak demand growth vs. contracted ESAs; management FY2026 EPS tracking vs. guidance range ($3.38–$3.52)
• ◆Additional ESA signings (FY2026–FY2027): any new hyperscaler ESA in Iowa/Wisconsin pushes total contracted load toward 4+ GW and immediately re-rates bull case toward $96
• ◆Iowa IUC 1 GW wind project approval (FY2026): ~$800M–$1B capex into rate base; +$0.30–0.40/share long-term EPS accretion; high probability given IUC history
• ◆1.1 GW gas unit construction start (FY2026–2027): confirms $13.4B capex plan execution and rate base milestone
• ◆Federal Reserve rate cuts: each 25bps cut compresses UST and supports 1x+ P/E expansion; Fed dovish pivot is the fastest path to $88+ stock price
• ◆Wisconsin PSCW rate case constructive outcome (FY2026–2027): approval of ESA cost recovery framework for WPL removes the one outstanding regulatory risk

• ◆10-yr UST rises and sustains above 5.5% for two consecutive quarters — compresses P/E from 21x to 17x even with no fundamental impairment; primary bear scenario
• ◆Any of the 5 executed ESAs is cancelled or reduced by >500 MW — impairs FY2028E EPS by $0.10–0.20/share and signals hyperscaler AI buildout deceleration in Iowa/Wisconsin; reduce LNT 40% within one week if triggered
• ◆Iowa IUC formally initiates a contested rate case against IPL — removes the structural earnings moat; would compress multiple to 16–17x; reduce LNT 50% immediately if triggered
• ◆FY2026 ongoing EPS prints below $3.15 (>7% below guidance floor of $3.38) — signals operational failure not weather timing; reduce LNT 35% and initiate thesis review
• ◆Wisconsin PSCW awards <$150M new annual revenue AND rejects ESA cost recovery framework — reduces WPL addressable ESA market and risks residential ratepayer political spillover into Iowa; reduce LNT 30% if triggered
• ◆Net debt/EBITDA elevated at ~7x during heavy capex cycle — rising rates increase financing costs; BBB/BBB+ credit secure but equity dilution (~260M to ~266M shares FY2026–FY2028) is a modest headwind