Should Value Investors Buy Allete (ALE) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Allete (ALE). ALE is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
We also note that ALE holds a PEG ratio of 1.81. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ALE's industry has an average PEG of 2.08 right now. Over the past 52 weeks, ALE's PEG has been as high as 2.38 and as low as 1.50, with a median of 1.76.
We should also highlight that ALE has a P/B ratio of 1.03. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.06. ALE's P/B has been as high as 1.13 and as low as 0.85, with a median of 1.03, over the past year.
Finally, we should also recognize that ALE has a P/CF ratio of 7.01. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 10. ALE's P/CF has been as high as 8.83 and as low as 5.82, with a median of 8.02, all within the past year.
If you're looking for another solid Utility - Electric Power value stock, take a look at Vistra (VST). VST is a # 2 (Buy) stock with a Value score of A.
Furthermore, Vistra holds a P/B ratio of 3.90 and its industry's price-to-book ratio is 2.06. VST's P/B has been as high as 3.90, as low as 2.68, with a median of 3.11 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that Allete and Vistra are likely undervalued currently. And when considering the strength of its earnings outlook, ALE and VST sticks out as one of the market's strongest value stocks.
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Allete, Inc. (ALE) : Free Stock Analysis Report
Vistra Corp. (VST) : Free Stock Analysis Report
