ALLETE INC (ALE) Stock Fundamental Analysis
NYSE:ALE - New York Stock Exchange, Inc. - US0185223007 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to ALE. ALE was compared to 46 industry peers in the Electric Utilities industry. Both the profitability and the financial health of ALE get a neutral evaluation. Nothing too spectacular is happening here. ALE has a valuation in line with the averages, but on the other hand it scores bad on growth. ALE also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year ALE was profitable.
ALE had a positive operating cash flow in the past year.
ALE had positive earnings in each of the past 5 years.
In the past 5 years ALE always reported a positive cash flow from operatings.
1.2 Ratios
ALE's Return On Assets of 2.65% is in line compared to the rest of the industry. ALE outperforms 54.35% of its industry peers.
The Return On Equity of ALE (6.30%) is worse than 73.91% of its industry peers.
The Return On Invested Capital of ALE (2.30%) is worse than 76.09% of its industry peers.
ALE had an Average Return On Invested Capital over the past 3 years of 2.33%. This is significantly below the industry average of 45.26%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.65% | ||
| ROE | 6.3% | ||
| ROIC | 2.3% |
ROA(3y)3.04%
ROA(5y)2.9%
ROE(3y)7.37%
ROE(5y)7.27%
ROIC(3y)2.33%
ROIC(5y)2.36%
1.3 Margins
The Profit Margin of ALE (11.72%) is comparable to the rest of the industry.
In the last couple of years the Profit Margin of ALE has declined.
ALE's Operating Margin of 10.47% is on the low side compared to the rest of the industry. ALE is outperformed by 69.57% of its industry peers.
In the last couple of years the Operating Margin of ALE has declined.
With an excellent Gross Margin value of 91.55%, ALE belongs to the best of the industry, outperforming 95.65% of the companies in the same industry.
ALE's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.47% | ||
| PM (TTM) | 11.72% | ||
| GM | 91.55% |
OM growth 3Y-0.62%
OM growth 5Y-6.31%
PM growth 3Y-0.57%
PM growth 5Y-4.77%
GM growth 3Y-1.28%
GM growth 5Y-0.42%
2. Health
2.1 Basic Checks
ALE has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
ALE has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, ALE has more shares outstanding
ALE has a better debt/assets ratio than last year.
2.2 Solvency
ALE has an Altman-Z score of 1.10. This is a bad value and indicates that ALE is not financially healthy and even has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.10, ALE belongs to the top of the industry, outperforming 80.43% of the companies in the same industry.
The Debt to FCF ratio of ALE is 17.62, which is on the high side as it means it would take ALE, 17.62 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 17.62, ALE belongs to the top of the industry, outperforming 86.96% of the companies in the same industry.
ALE has a Debt/Equity ratio of 0.60. This is a neutral value indicating ALE is somewhat dependend on debt financing.
ALE's Debt to Equity ratio of 0.60 is amongst the best of the industry. ALE outperforms 86.96% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.6 | ||
| Debt/FCF | 17.62 | ||
| Altman-Z | 1.1 |
ROIC/WACC0.31
WACC7.43%
2.3 Liquidity
ALE has a Current Ratio of 1.08. This is a normal value and indicates that ALE is financially healthy and should not expect problems in meeting its short term obligations.
ALE has a Current ratio of 1.08. This is in the better half of the industry: ALE outperforms 76.09% of its industry peers.
A Quick Ratio of 0.69 indicates that ALE may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.69, ALE is in the better half of the industry, outperforming 63.04% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.08 | ||
| Quick Ratio | 0.69 |
3. Growth
3.1 Past
ALE shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -23.32%.
Measured over the past years, ALE shows a decrease in Earnings Per Share. The EPS has been decreasing by -2.89% on average per year.
Looking at the last year, ALE shows a very negative growth in Revenue. The Revenue has decreased by -18.62% in the last year.
ALE shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.28% yearly.
EPS 1Y (TTM)-23.32%
EPS 3Y-1.36%
EPS 5Y-2.89%
EPS Q2Q%10.23%
Revenue 1Y (TTM)-18.62%
Revenue growth 3Y2.53%
Revenue growth 5Y4.28%
Sales Q2Q%-0.77%
3.2 Future
Based on estimates for the next years, ALE will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.96% on average per year.
ALE is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.14% yearly.
EPS Next Y28.37%
EPS Next 2Y18.6%
EPS Next 3Y15.59%
EPS Next 5Y11.96%
Revenue Next Year-1.51%
Revenue Next 2Y2%
Revenue Next 3Y3.82%
Revenue Next 5Y5.14%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 20.37, ALE is valued on the expensive side.
Compared to the rest of the industry, the Price/Earnings ratio of ALE is on the same level as its industry peers.
ALE's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.82.
The Price/Forward Earnings ratio is 14.90, which indicates a correct valuation of ALE.
ALE's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. ALE is cheaper than 73.91% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of ALE to the average of the S&P500 Index (21.76), we can say ALE is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.37 | ||
| Fwd PE | 14.9 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as ALE.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ALE indicates a rather cheap valuation: ALE is cheaper than 86.96% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 36.85 | ||
| EV/EBITDA | 12.62 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
ALE's earnings are expected to grow with 15.59% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.72
PEG (5Y)N/A
EPS Next 2Y18.6%
EPS Next 3Y15.59%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 4.49%, ALE is a good candidate for dividend investing.
ALE's Dividend Yield is rather good when compared to the industry average which is at 3.45. ALE pays more dividend than 82.61% of the companies in the same industry.
ALE's Dividend Yield is rather good when compared to the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.49% |
5.2 History
The dividend of ALE has a limited annual growth rate of 3.68%.
ALE has paid a dividend for at least 10 years, which is a reliable track record.
ALE has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)3.68%
Div Incr Years14
Div Non Decr Years19
5.3 Sustainability
ALE pays out 90.80% of its income as dividend. This is not a sustainable payout ratio.
The dividend of ALE is growing, but earnings are growing more, so the dividend growth is sustainable.
DP90.8%
EPS Next 2Y18.6%
EPS Next 3Y15.59%
64.98
+0.03 (+0.05%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners74.97%
Inst Owner Change3.37%
Ins Owners0.26%
Ins Owner Change3.28%
Market Cap3.77B
Analysts75
Price Target67.5 (3.88%)
Short Float %1.94%
Short Ratio3.1
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.49% |
Yearly Dividend2.82
Dividend Growth(5Y)3.68%
DP90.8%
Div Incr Years14
Div Non Decr Years19
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-19.7%
Min EPS beat(2)-22.75%
Max EPS beat(2)-16.66%
EPS beat(4)0
Avg EPS beat(4)-22.57%
Min EPS beat(4)-35.87%
Max EPS beat(4)-15%
EPS beat(8)2
Avg EPS beat(8)3.07%
EPS beat(12)3
Avg EPS beat(12)-0.47%
EPS beat(16)5
Avg EPS beat(16)-1.82%
Revenue beat(2)1
Avg Revenue beat(2)-4.82%
Min Revenue beat(2)-12.76%
Max Revenue beat(2)3.11%
Revenue beat(4)1
Avg Revenue beat(4)-16.59%
Min Revenue beat(4)-35.83%
Max Revenue beat(4)3.11%
Revenue beat(8)3
Avg Revenue beat(8)-2.28%
Revenue beat(12)7
Avg Revenue beat(12)0.83%
Revenue beat(16)11
Avg Revenue beat(16)3.82%
PT rev (1m)0%
PT rev (3m)-0.3%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-16.13%
EPS NY rev (1m)2.96%
EPS NY rev (3m)1.11%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-4.28%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.37 | ||
| Fwd PE | 14.9 | ||
| P/S | 2.46 | ||
| P/FCF | 36.85 | ||
| P/OCF | 8.24 | ||
| P/B | 1.32 | ||
| P/tB | 1.4 | ||
| EV/EBITDA | 12.62 |
EPS(TTM)3.19
EY4.91%
EPS(NY)4.36
Fwd EY6.71%
FCF(TTM)1.76
FCFY2.71%
OCF(TTM)7.89
OCFY12.14%
SpS26.39
BVpS49.14
TBVpS46.46
PEG (NY)0.72
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.65% | ||
| ROE | 6.3% | ||
| ROCE | 2.52% | ||
| ROIC | 2.3% | ||
| ROICexc | 2.32% | ||
| ROICexgc | 2.37% | ||
| OM | 10.47% | ||
| PM (TTM) | 11.72% | ||
| GM | 91.55% | ||
| FCFM | 6.68% |
ROA(3y)3.04%
ROA(5y)2.9%
ROE(3y)7.37%
ROE(5y)7.27%
ROIC(3y)2.33%
ROIC(5y)2.36%
ROICexc(3y)2.34%
ROICexc(5y)2.38%
ROICexgc(3y)2.4%
ROICexgc(5y)2.41%
ROCE(3y)2.55%
ROCE(5y)2.58%
ROICexcg growth 3Y0.06%
ROICexcg growth 5Y-6.66%
ROICexc growth 3Y-0.77%
ROICexc growth 5Y-7.11%
OM growth 3Y-0.62%
OM growth 5Y-6.31%
PM growth 3Y-0.57%
PM growth 5Y-4.77%
GM growth 3Y-1.28%
GM growth 5Y-0.42%
F-Score5
Asset Turnover0.23
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.6 | ||
| Debt/FCF | 17.62 | ||
| Debt/EBITDA | 3.89 | ||
| Cap/Depr | 127.57% | ||
| Cap/Sales | 23.2% | ||
| Interest Coverage | 2.13 | ||
| Cash Conversion | 104.29% | ||
| Profit Quality | 57% | ||
| Current Ratio | 1.08 | ||
| Quick Ratio | 0.69 | ||
| Altman-Z | 1.1 |
F-Score5
WACC7.43%
ROIC/WACC0.31
Cap/Depr(3y)106.82%
Cap/Depr(5y)166.23%
Cap/Sales(3y)17.22%
Cap/Sales(5y)29.28%
Profit Quality(3y)61.51%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-23.32%
EPS 3Y-1.36%
EPS 5Y-2.89%
EPS Q2Q%10.23%
EPS Next Y28.37%
EPS Next 2Y18.6%
EPS Next 3Y15.59%
EPS Next 5Y11.96%
Revenue 1Y (TTM)-18.62%
Revenue growth 3Y2.53%
Revenue growth 5Y4.28%
Sales Q2Q%-0.77%
Revenue Next Year-1.51%
Revenue Next 2Y2%
Revenue Next 3Y3.82%
Revenue Next 5Y5.14%
EBIT growth 1Y-11.5%
EBIT growth 3Y1.9%
EBIT growth 5Y-2.29%
EBIT Next Year158.47%
EBIT Next 3Y53.28%
EBIT Next 5Y37.33%
FCF growth 1Y-67.46%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-21.9%
OCF growth 3Y20.16%
OCF growth 5Y12.87%