ALLETE INC (ALE) Stock Fundamental Analysis
NYSE:ALE - New York Stock Exchange, Inc. - US0185223007 - Common Stock - Currency: USD
Overall ALE gets a fundamental rating of 4 out of 10. We evaluated ALE against 47 industry peers in the Electric Utilities industry. ALE has an average financial health and profitability rating. ALE is valued correctly, but it does not seem to be growing. Finally ALE also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
ALE had positive earnings in the past year.
ALE had a positive operating cash flow in the past year.
In the past 5 years ALE has always been profitable.
In the past 5 years ALE always reported a positive cash flow from operatings.
1.2 Ratios
ALE has a Return On Assets (2.69%) which is in line with its industry peers.
ALE has a Return On Equity of 6.44%. This is amonst the worse of the industry: ALE underperforms 89.36% of its industry peers.
ALE's Return On Invested Capital of 2.34% is on the low side compared to the rest of the industry. ALE is outperformed by 91.49% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ALE is significantly below the industry average of 38.54%.
The 3 year average ROIC (2.33%) for ALE is below the current ROIC(2.34%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.69% | ||
| ROE | 6.44% | ||
| ROIC | 2.34% |
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 (12.10%) is comparable to the rest of the industry.
ALE's Profit Margin has declined in the last couple of years.
ALE has a Operating Margin of 10.86%. This is amonst the worse of the industry: ALE underperforms 85.11% of its industry peers.
ALE's Operating Margin has declined in the last couple of years.
ALE has a better Gross Margin (91.50%) than 95.74% of its industry peers.
In the last couple of years the Gross Margin of ALE has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.86% | ||
| PM (TTM) | 12.1% | ||
| GM | 91.5% |
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.
Compared to 1 year ago, ALE has more shares outstanding
The number of shares outstanding for ALE has been increased compared to 5 years ago.
Compared to 1 year ago, ALE has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 1.11, we must say that ALE is in the distress zone and has some risk of bankruptcy.
With a decent Altman-Z score value of 1.11, ALE is doing good in the industry, outperforming 68.09% of the companies in the same industry.
ALE has a debt to FCF ratio of 32.94. This is a negative value and a sign of low solvency as ALE would need 32.94 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 32.94, ALE is doing good in the industry, outperforming 74.47% of the companies in the same industry.
ALE has a Debt/Equity ratio of 0.64. This is a neutral value indicating ALE is somewhat dependend on debt financing.
ALE's Debt to Equity ratio of 0.64 is fine compared to the rest of the industry. ALE outperforms 70.21% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.64 | ||
| Debt/FCF | 32.94 | ||
| Altman-Z | 1.11 |
ROIC/WACC0.32
WACC7.41%
2.3 Liquidity
ALE has a Current Ratio of 1.26. This is a normal value and indicates that ALE is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.26, ALE is in the better half of the industry, outperforming 72.34% of the companies in the same industry.
A Quick Ratio of 0.81 indicates that ALE may have some problems paying its short term obligations.
With a Quick ratio value of 0.81, ALE perfoms like the industry average, outperforming 55.32% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.26 | ||
| Quick Ratio | 0.81 |
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.
The Revenue for ALE has decreased by -11.15% in the past year. This is quite bad
The Revenue has been growing slightly by 4.28% on average over the past years.
EPS 1Y (TTM)-23.32%
EPS 3Y-1.36%
EPS 5Y-2.89%
EPS Q2Q%10.23%
Revenue 1Y (TTM)-11.15%
Revenue growth 3Y2.53%
Revenue growth 5Y4.28%
Sales Q2Q%-0.77%
3.2 Future
ALE is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.96% yearly.
Based on estimates for the next years, ALE will show a small growth in Revenue. The Revenue will grow by 5.14% on average per year.
EPS Next Y25.22%
EPS Next 2Y17.21%
EPS Next 3Y15.1%
EPS Next 5Y11.96%
Revenue Next Year-1.51%
Revenue Next 2Y2%
Revenue Next 3Y3.82%
Revenue Next 5Y5.14%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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 20.58, ALE is valued on the expensive side.
70.21% of the companies in the same industry are cheaper than ALE, based on the Price/Earnings ratio.
ALE's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.50.
ALE is valuated correctly with a Price/Forward Earnings ratio of 15.42.
The rest of the industry has a similar Price/Forward Earnings ratio as ALE.
When comparing the Price/Forward Earnings ratio of ALE to the average of the S&P500 Index (36.44), we can say ALE is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.58 | ||
| Fwd PE | 15.42 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ALE is valued a bit more expensive than 68.09% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ALE is valued a bit cheaper than the industry average as 72.34% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 65.04 | ||
| EV/EBITDA | 12.57 |
4.3 Compensation for Growth
ALE's 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 15.10% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.82
PEG (5Y)N/A
EPS Next 2Y17.21%
EPS Next 3Y15.1%
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 a higher than the industry average which is at 3.64.
ALE's Dividend Yield is rather good when compared to the S&P500 average which is at 2.35.
| 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 their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)3.68%
Div Incr Years14
Div Non Decr Years19
5.3 Sustainability
ALE pays out 89.06% 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.
DP89.06%
EPS Next 2Y17.21%
EPS Next 3Y15.1%
65.65
-0.01 (-0.02%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners74.61%
Inst Owner Change0%
Ins Owners0.27%
Ins Owner Change5.87%
Market Cap3.81B
Analysts77.14
Price Target67.5 (2.82%)
Short Float %1.83%
Short Ratio2.42
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.49% |
Yearly Dividend2.82
Dividend Growth(5Y)3.68%
DP89.06%
Div Incr Years14
Div Non Decr Years19
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-15.2%
Min EPS beat(2)-22.75%
Max EPS beat(2)-7.65%
EPS beat(4)0
Avg EPS beat(4)-20.73%
Min EPS beat(4)-35.87%
Max EPS beat(4)-7.65%
EPS beat(8)2
Avg EPS beat(8)3.87%
EPS beat(12)3
Avg EPS beat(12)-0.57%
EPS beat(16)5
Avg EPS beat(16)-1.69%
Revenue beat(2)0
Avg Revenue beat(2)-12.96%
Min Revenue beat(2)-13.16%
Max Revenue beat(2)-12.76%
Revenue beat(4)1
Avg Revenue beat(4)-14.66%
Min Revenue beat(4)-35.83%
Max Revenue beat(4)3.11%
Revenue beat(8)2
Avg Revenue beat(8)-9.14%
Revenue beat(12)6
Avg Revenue beat(12)-0.89%
Revenue beat(16)10
Avg Revenue beat(16)2.77%
PT rev (1m)0%
PT rev (3m)0%
EPS NQ rev (1m)0%
EPS NQ rev (3m)4.65%
EPS NY rev (1m)-2.45%
EPS NY rev (3m)-0.26%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.58 | ||
| Fwd PE | 15.42 | ||
| P/S | 2.49 | ||
| P/FCF | 65.04 | ||
| P/OCF | 7.5 | ||
| P/B | 1.33 | ||
| P/tB | 1.4 | ||
| EV/EBITDA | 12.57 |
EPS(TTM)3.19
EY4.86%
EPS(NY)4.26
Fwd EY6.49%
FCF(TTM)1.01
FCFY1.54%
OCF(TTM)8.75
OCFY13.33%
SpS26.34
BVpS49.45
TBVpS46.77
PEG (NY)0.82
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.69% | ||
| ROE | 6.44% | ||
| ROCE | 2.56% | ||
| ROIC | 2.34% | ||
| ROICexc | 2.37% | ||
| ROICexgc | 2.43% | ||
| OM | 10.86% | ||
| PM (TTM) | 12.1% | ||
| GM | 91.5% | ||
| FCFM | 3.83% |
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 Turnover0.22
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.64 | ||
| Debt/FCF | 32.94 | ||
| Debt/EBITDA | 4.08 | ||
| Cap/Depr | 158.55% | ||
| Cap/Sales | 29.39% | ||
| Interest Coverage | 2.23 | ||
| Cash Conversion | 113.01% | ||
| Profit Quality | 31.67% | ||
| Current Ratio | 1.26 | ||
| Quick Ratio | 0.81 | ||
| Altman-Z | 1.11 |
F-Score5
WACC7.41%
ROIC/WACC0.32
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 Y25.22%
EPS Next 2Y17.21%
EPS Next 3Y15.1%
EPS Next 5Y11.96%
Revenue 1Y (TTM)-11.15%
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-7.84%
EBIT growth 3Y1.9%
EBIT growth 5Y-2.29%
EBIT Next Year158.47%
EBIT Next 3Y53.28%
EBIT Next 5Y37.33%
FCF growth 1Y-31.42%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y59.25%
OCF growth 3Y20.16%
OCF growth 5Y12.87%