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ALLETE (ALE): What's in the Cards this Earnings Season?

Zacks Equity Research

ALLETE, Inc. ALE is scheduled to report fourth-quarter results on Feb 15, before the market opens. Last quarter, the company delivered a positive earnings surprise of 3.13%. Let’s see how things are shaping up for this quarter.

Factors to Consider

Above-average temperatures in ALLETE’s service territories in the fourth quarter are expected to hit its top line.

ALLETE has been pursuing a strategy of using rider recovery for significant environmental, renewable and transmission investments. This year, ALLETE‘s subsidiary, Minnesota Power, is expected to generate nearly $100 million in current cost recovery rider revenue.

Earnings Whispers

Our proven model does not conclusively show that ALLETE will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -5.48%. This is because the Most Accurate estimate stands at 69 cents and the Zacks Consensus Estimate is pegged at 73 cents.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Allete, Inc. Price and EPS Surprise

Allete, Inc. Price and EPS Surprise | Allete, Inc. Quote

Zacks Rank: Though ALLETE’s Zacks Rank #3 increases the predictive power of ESP, its negative ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few stocks in the utility space worth considering as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Entergy Corporation ETR is slated to report earnings on Feb 15. It is has an Earnings ESP of +9.09% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

FirstEnergy Corp. FE has an Earnings ESP of +2.56% and a Zacks Rank #3. It is expected to release its quarterly numbers on Feb 21.

Pinnacle West Capital Corporation PNW has an Earnings ESP of +2.04% and a Zacks Rank #2. It is slated to report earnings on Feb 24.

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Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report
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Allete, Inc. (ALE): Free Stock Analysis Report
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