Here's Why You Should Add ALLETE (ALE) to Your Portfolio Now
ALLETE Inc.’s ALE consistent investments in infrastructure and clean energy will further drive its performance. The company benefits from its focus on providing competitively-priced energy. Given its growth opportunities, ALLETE makes for a solid investment option in the utility sector.
Let’s focus on the factors, which make this Zacks Rank #2 (Buy) company a strong investment option at the moment.
Growth Projections
The Zacks Consensus Estimate for ALE’s 2023 earnings per share (EPS) has increased 1.1% to $3.67 in the past 60 days.
The consensus estimate for 2023 sales is pinned at $1.94 billion, indicating year-over-year increase of 23.8%.
ALLETE’s long-term (three to five-year) earnings growth rate is 8.1%.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, ALLETE’s ROE is 5.81%, which is higher than the industry’s average of 5.43%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
Debt Position
Currently, ALE’s total debt to capital is 34.73%, better than the industry’s average of 62.16%.
The time-to-interest earned ratio at the end of second-quarter 2023 was 2.6. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Dividend History
The utility company has been consistently paying dividends to its shareholders. Currently, the company’s quarterly dividend is 67.75 cents per share. This results in an annualized dividend of $2.71 per share, up 4.2% from the previous year’s dividend of $2.6 per share. ALLETE’s current dividend yield is 4.99%, better than the Zacks S&P 500 Composite’s 1.47%.
Focus on Renewables
ALLETE Clean Energy business has established a renewable energy platform of 1,500 megawatt (MW). The company further plans to expand its portfolio with 500 MW hours of battery storage, 700 MW of wind and solar energy, and other renewable energy sources.
ALLETE’s unit, Minnesota Power, aims to become coal-free by 2035 and 100% carbon-free by 2050. It has successfully retired seven of its nine coal facilities as of Jun 30, 2023.
Price Performance
In the past year, ALE’s shares have risen 9.5% against the industry’s average decline of 8.4%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few top-ranked stocks from the same industry are Vistra Corp. VST, which currently sports a Zacks Rank #1 (Strong Buy), and Avangrid Inc. AGR and OGE Energy Corp. OGE, each holding a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for VST’s 2023 EPS indicates a year-over-year improvement of 220.4%. The same for sales indicates a year-over-year increase of 47.8%.
AGR’s long-term earnings growth rate is 4.05%. The consensus estimate for the company’s 2023 sales implies year-over-year growth of 6.44%.
OGE’s long-term earnings growth rate is 3.65%. It delivered an average earnings surprise of 3.8% in the last four quarters.
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OGE Energy Corporation (OGE) : Free Stock Analysis Report
Allete, Inc. (ALE) : Free Stock Analysis Report
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