ALLETE, Inc. Just Beat Revenue By 6.3%: Here's What Analysts Think Will Happen Next
ALLETE, Inc. (NYSE:ALE) shareholders are probably feeling a little disappointed, since its shares fell 3.0% to US$56.95 in the week after its latest yearly results. Results overall were respectable, with statutory earnings of US$4.30 per share roughly in line with what the analysts had forecast. Revenues of US$1.9b came in 6.3% ahead of analyst predictions. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for ALLETE
Taking into account the latest results, the current consensus, from the six analysts covering ALLETE, is for revenues of US$1.64b in 2024. This implies a not inconsiderable 13% reduction in ALLETE's revenue over the past 12 months. Statutory earnings per share are forecast to reduce 7.3% to US$3.98 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.70b and earnings per share (EPS) of US$4.08 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
The analysts made no major changes to their price target of US$63.12, suggesting the downgrades are not expected to have a long-term impact on ALLETE's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values ALLETE at US$80.00 per share, while the most bearish prices it at US$57.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ALLETE's past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 13% by the end of 2024. This indicates a significant reduction from annual growth of 7.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ALLETE is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for ALLETE going out to 2026, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for ALLETE you should be aware of, and 1 of them is a bit unpleasant.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
