Alliant Energy CorporationLNTNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

⚠️Model Warnings

•Terminal value represents 86% of enterprise value. Valuation highly sensitive to long-term assumptions.

DCF Valuation Summary

Strong Buy

Fair Value: $108.84 per share(market-calibrated)

+50.5%

Upside to Fair Value

Current

$72.33

Pure Model

$119.59

Fair Value

$108.84

Bull Case

$153.91

Bear Case

$89.29

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

0.50%

Calibrated Growth

1.48%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $119.59.

What's Driving This Ratingfor LNT

↓

CapEx normalizing toward maintenance

Historical CapEx is 42.36% of revenue (heavy investment phase). Model fades this to 5.00% by Year 10, freeing up ~$2.6B in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 30.31% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects -1.00% revenue growth, fading to 2.00% by Year 10. Revenue reaches $6.8B (vs $4.4B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $141.24/share (29.0x terminal FCF) while exit multiple gives $97.94/share (21.1x terminal FCF). The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 150bps below the model's 2.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 75.67% indicates efficient cash generation. FCF reaches $2.4B by Year 10 (35.57% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.67

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)7.51%

Cost of Debt

Pre-tax Cost of Debt3.18%

Tax Rate21.00%

After-tax Cost of Debt2.51%

Equity Weight (E/V)60.09%

Debt Weight (D/V)39.91%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (60.09% × 7.51%) + (39.91% × 2.51%)

= 5.52%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$4.3B	$4.7B	$5.5B	$6.2B	$6.8B
EBIT	$1.3B	$1.4B	$1.7B	$1.9B	$2.1B
Tax	$275M	$297M	$348M	$394M	$435M
NOPAT	$1.0B	$1.1B	$1.3B	$1.5B	$1.6B
+ Depreciation	$721M	$780M	$912M	$1.0B	$1.1B
- Capex	$1.8B	$1.6B	$1.4B	$1.1B	$341M
- Δ NWC	-$2M	$8M	$16M	$13M	$5M
Free Cash Flow	-$72M	$300M	$797M	$1.4B	$2.4B
Discount Factor	0.948	0.851	0.764	0.687	0.584
Present Value	-$69M	$255M	$609M	$978M	$1.4B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.4B

Terminal Growth Rate2.00%

WACC5.52%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$70.4B

PV of Terminal Value$41.1B

Exit Multiple Method

Year 10 EBITDA$3.2B

Exit Multiple (EV/EBITDA)16.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$51.4B

PV of Terminal Value$30.0B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$6.9B

PV of Terminal Value$41.1B

Enterprise Value$48.1B

(-) Net Debt$11.8B

Equity Value$36.3B

Shares Outstanding257M

Price per Share$141.24

Exit Multiple Method

PV of Projected FCFs$6.9B

PV of Terminal Value$30.0B

Enterprise Value$37.0B

(-) Net Debt$11.8B

Equity Value$25.2B

Shares Outstanding257M

Price per Share$97.94

Pure Model Fair Value

$119.59

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.00%	1.50%	2.00%	2.50%	3.00%
3.52%	$190.14	$224.17	$214.58	$203.48	$192.91
4.52%	$134.56	$149.51	$170.38	$201.59	$192.91
5.52%	$101.26	$109.28	$119.59	$133.30	$152.46
6.52%	$78.43	$83.26	$89.16	$96.53	$105.99
7.52%	$61.47	$64.60	$68.31	$72.75	$78.17

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$89.29

23.4% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.84

Base Case

$119.59

65.3% vs current

• Analyst consensus
• Terminal growth: 2.0%
• Beta: 0.67

Bull Case

$153.91

112.8% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.57

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Utilities Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-1.00%

Year 3 Revenue Growth4.68%

Year 5 Revenue Growth8.45%

Year 7 Revenue Growth5.87%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin30.31%

Tax Rate21.00%

Historical Capex / Rev42.36%

Terminal Capex / Rev5.00%

NWC / Revenue3.78%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 16x EV/EBITDA (Utilities sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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