Contrasting Allete (ALE) and Its Competitors

Allete (NYSE: ALE) is one of 87 public companies in the “Electric Utilities” industry, but how does it contrast to its peers? We will compare Allete to related companies based on the strength of its analyst recommendations, earnings, profitability, dividends, valuation, risk and institutional ownership.

Dividends

Allete pays an annual dividend of $2.14 per share and has a dividend yield of 2.8%. Allete pays out 61.8% of its earnings in the form of a dividend. As a group, “Electric Utilities” companies pay a dividend yield of 3.1% and pay out 105.6% of their earnings in the form of a dividend. Allete has increased its dividend for 6 consecutive years.

Insider & Institutional Ownership

71.1% of Allete shares are held by institutional investors. Comparatively, 65.6% of shares of all “Electric Utilities” companies are held by institutional investors. 0.4% of Allete shares are held by insiders. Comparatively, 2.7% of shares of all “Electric Utilities” companies are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Allete and its peers gross revenue, earnings per share and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
Allete $1.34 billion $155.30 million 22.23
Allete Competitors $7.66 billion $831.80 million 53.36

Allete’s peers have higher revenue and earnings than Allete. Allete is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Analyst Ratings

This is a summary of recent recommendations and price targets for Allete and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allete 1 2 0 0 1.67
Allete Competitors 530 2940 2359 41 2.33

Allete currently has a consensus target price of $76.67, suggesting a potential downside of 0.34%. As a group, “Electric Utilities” companies have a potential upside of 6.75%. Given Allete’s peers stronger consensus rating and higher probable upside, analysts plainly believe Allete has less favorable growth aspects than its peers.

Volatility and Risk

Allete has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500. Comparatively, Allete’s peers have a beta of 0.65, indicating that their average stock price is 35% less volatile than the S&P 500.

Profitability

This table compares Allete and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allete 12.31% 9.21% 3.71%
Allete Competitors -10.84% 3.41% 0.48%

Summary

Allete peers beat Allete on 10 of the 15 factors compared.

Allete Company Profile

ALLETE, Inc. is an energy company. The Company’s segments include Regulated Operations, ALLETE Clean Energy, Inc. (ALLETE Clean Energy), U.S. Water Services Holding Company (U.S. Water Services), and Corporate and Other. The Regulated Operations segment includes its regulated utilities, Minnesota Power, and Superior Water, Light and Power Company, and its investment in American Transmission Company LLC. The ALLETE Clean Energy segment focuses on developing, acquiring and operating clean and renewable energy projects. The U.S. Water Services provides integrated water management for industry by combining chemical, equipment, engineering and service for customized solution. As of December 31, 2016, its Corporate and Other consisted of BNI Energy, Inc. (BNI Energy), its coal mining operations in North Dakota, ALLETE Properties, LLC (ALLETE Properties), its Florida real estate investment and approximately 5,000 acres of land in Minnesota.

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