As ALLETE, Inc. (NYSE:ALE) announced its earnings release on 31 December 2018, analysts seem cautiously bearish, with earnings expected to grow by 1.1% in the upcoming year compared with the higher past 5-year average growth rate of 9.3%. Presently, with latest-twelve-month earnings at US$174m, we should see this growing to US$176m by 2020. Below is a brief commentary on the longer term outlook the market has for ALLETE. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect ALLETE to keep growing?
Over the next three years, it seems the consensus view of the 4 analysts covering ALE is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for ALE, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2022, ALE’s earnings should reach US$190m, from current levels of US$174m, resulting in an annual growth rate of 4.2%. EPS reaches $4.07 in the final year of forecast compared to the current $3.39 EPS today. In 2022, ALE’s profit margin will have expanded from 12% to 14%.
Future outlook is only one aspect when you’re building an investment case for a stock. For ALLETE, there are three relevant aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is ALLETE worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ALLETE is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of ALLETE? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.