Alliant Energy Corporation
) finally entered into an agreement to hive off its renewable
energy services subsidiary RMT, Inc. ("RMT") to Infrastructure
and Energy Alternatives, LLC ("IEA"). Alliant had expressed its
intention to sell this subsidiary in February and appointed a
leading investment bank for the purpose.
RMT Inc. did not feature in the long-term growth plans of the
company. We expect the company to utilize the proceeds for
further growth initiatives. The company expects to close the
transaction by January 2013.
The company was determined to shed this business within this
year, which was evident from the guidance provided during the
third quarter earnings release. The guidance for 2012 included a
charge of 14 cents per share associated with state tax
apportionment changes at the utilities resulting from the planned
sale of RMT. The company expects its 2012 earnings to range from
$2.75 to $3.05 per share.
Alliant's 2013 earnings are expected to be between $2.95 and
$3.25 per share. Rate increase and benefits from utility
investment will boost earnings in 2013 surpassing 2012 levels.
The Zacks Consensus Estimates for 2012 and 2013 are $2.98 and
$3.13 per share, respectively.
The company will refocus on its existing assets once it divests
its renewable business. It is also looking to expand its
operations in focus areas. Alliant Energy will spend $395 million
for the Riverside Energy Center acquisition, which we feel is an
The acquisition of the 600-megawatt Riverside Energy Center will
definitely boost the prospects of Alliant's utility company
Wisconsin Power and Light Company ("WPL"). The capital
expenditure plans from 2012 through 2016 suggests that Alliant
will systematically increase its natural gas supply and utility
service providing capacity.
The present valuation of the company looks reasonable. The
forward price-earnings (P/E) multiple of the company is 14.9%, in
line with its industry peers, while its ROE is 11.1%, higher than
the peer group average of 9.8%. We expect the planned capital
expenditure of the company will enable it to reach new highs in
the forthcoming years.
Another utility operating in the same region
Wisconsin Energy Corporation
) presently has a short-term Zacks # 2 Rank ( Buy rating).
Based in Madison, Wisconsin, Alliant Energy Corporation is an
electric and natural gas service provider. The company provides
services to one million electric and 412,000 natural gas
consumers located in Iowa, Wisconsin and Minnesota. The company
retains a short-term Zacks #2 Rank (Buy rating).
ALLIANT ENGY CP (LNT): Free Stock Analysis
WISC ENERGY CP (WEC): Free Stock Analysis
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