For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on ALLETE, Inc. (NYSE:ALE) useful as an attempt to give more color around how ALLETE is currently performing.
How ALE fared against its long-term earnings performance and its industry
ALE's trailing twelve-month earnings (from 30 June 2019) of US$197m has jumped 17% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.8%, indicating the rate at which ALE is growing has accelerated. What's enabled this growth? Let's see whether it is solely a result of industry tailwinds, or if ALLETE has seen some company-specific growth.
In terms of returns from investment, ALLETE has fallen short of achieving a 20% return on equity (ROE), recording 8.9% instead. However, its return on assets (ROA) of 5.1% exceeds the US Electric Utilities industry of 4.5%, indicating ALLETE has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for ALLETE’s debt level, has declined over the past 3 years from 5.7% to 4.3%.
What does this mean?
ALLETE's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research ALLETE to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ALE’s future growth? Take a look at our free research report of analyst consensus for ALE’s outlook.
- Financial Health: Are ALE’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
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 firstname.lastname@example.org. 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.