Allete (ALE) AI Stock Analysis

• Market Cap: $3.78B
• Dividend Yield: 4.36%
• Average Volume (3M): 375.34K
• Price to Earnings (P/E): 21.0
• Beta (1Y): 0.13
• Revenue Growth: -18.62%
• EPS Growth: -27.88%
• Country: US
• Employees: 1,564
• Sector: Utilities
• Sector Strength: 94
• Industry: Diversified Utilities
• EPS (TTM): 3.10
• Shares Outstanding: 57,962,040
• 10 Day Avg. Volume: 311,348
• 30 Day Avg. Volume: 375,342
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.60
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 5.19
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $67.00
• Price Target Upside: 2.31% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

Allete's stock score is driven by its strong profitability and stable balance sheet, which are key strengths. However, declining revenue growth and free cash flow present challenges that need to be addressed. The stock's valuation is moderate, and technical indicators suggest a neutral trend with no immediate catalysts for significant price movement.

Allete Business Overview & Revenue Model

Company Description

ALLETE, Inc. operates as an energy company. The company operates through Regulated Operations, ALLETE Clean Energy, and Corporate and Other segments. It generates electricity from coal-fired, biomass co-fired / natural gas, hydroelectric, wind, and solar. The company provides regulated utility electric services in northwestern Wisconsin to approximately 15,000 electric customers, 13,000 natural gas customers, and 10,000 water customers, as well as regulated utility electric services in northeastern Minnesota to approximately 145,000 retail customers and 15 non-affiliated municipal customers. It also owns and maintains electric transmission assets in Wisconsin, Michigan, Minnesota, and Illinois. In addition, the company focuses on developing, acquiring, and operating clean and renewable energy projects; and owns and operates approximately 1,000 megawatts of wind energy generation facility. Further, it is involved in the coal mining operations in North Dakota; and real estate investment activities in Florida. The company owns and operates 158 substations with a total capacity of 10,066 megavolt amperes. It serves taconite mining, paper, pulp and secondary wood products, pipeline, and other industries. The company was formerly known as Minnesota Power, Inc. and changed its name to ALLETE, Inc. in May 2001. ALLETE, Inc. was incorporated in 1906 and is headquartered in Duluth, Minnesota.

How the Company Makes Money

Allete makes money primarily through its Regulated Operations segment, which involves the sale of electricity to retail and wholesale customers in Minnesota and Wisconsin. This segment generates revenue through regulated electricity rates approved by state regulatory commissions. Additionally, Allete's Clean Energy segment contributes to its revenue by engaging in renewable energy projects, including wind and solar, which are sold under long-term power purchase agreements. The company's BNI Energy unit provides additional revenue by supplying lignite coal under long-term contracts. Allete's financial performance is also influenced by its strategic investments in renewable energy assets and infrastructure, aiming to meet the growing demand for clean energy.

Allete Financial Statement Overview

Summary

Allete shows strong profitability with a high net profit margin and stable balance sheet indicative of a regulated utility. However, the company faces challenges with declining revenue and free cash flow, suggesting a need for improved growth and cash flow management strategies.

Income Statement

Allete has shown a mixed performance in terms of revenue growth. The revenue decreased from $1.88B in 2023 to $1.53B in 2024, indicating a decline. However, the net profit margin improved as net income increased to $179.3M despite the revenue drop, suggesting effective cost management. The gross profit margin is strong at 76.4%, but the decline in EBIT margin from the previous year suggests some operational challenges. Overall, solid profitability but issues with growth need addressing.

Balance Sheet

Allete's debt-to-equity ratio stands at 0.63, indicating a reasonable leverage level for a regulated utility company. The equity ratio is stable at 42.2%, reflecting a sound capital structure. The return on equity is 6.3%, showing moderate efficiency in using shareholder capital. The balance sheet is stable, but the moderate ROE suggests room for improvement in generating profits from equity.

Cash Flow

The operating cash flow to net income ratio of 2.55 indicates strong cash generation relative to net income, a positive sign of liquidity. However, the free cash flow has declined significantly from $314.1M in 2023 to $102.2M in 2024, reflecting increased capital expenditures. The free cash flow to net income ratio is 0.57, showing a drop in cash available after capital investments. While liquidity is strong, the decline in free cash flow is a concern.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.53B	1.88B	1.57B	1.42B	1.17B
	Gross Profit
1.17B	489.90M	446.80M	453.50M	424.80M
	EBIT
160.10M	180.90M	134.20M	151.30M	150.90M
	EBITDA
486.30M	539.40M	417.50M	411.70M	405.50M
	Net Income Common Stockholders
179.30M	247.10M	131.30M	169.20M	174.20M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
32.80M	71.90M	36.40M	45.10M	44.30M
	Total Assets
6.75B	6.66B	6.85B	6.43B	6.08B
	Total Debt
1.80B	1.79B	1.93B	1.99B	1.82B
	Net Debt
1.77B	1.72B	1.90B	1.95B	1.77B
	Total Liabilities
3.36B	3.25B	3.50B	3.49B	3.28B
	Stockholders Equity
2.85B	2.81B	2.69B	2.41B	2.29B
Cash Flow		Free Cash Flow
102.20M	314.10M	800.00K	-209.80M	-418.00M
	Operating Cash Flow
457.10M	585.30M	221.30M	263.50M	299.80M
	Investing Cash Flow
-340.70M	-283.60M	-384.00M	-485.20M	-812.80M
	Financing Cash Flow
-140.60M	-262.50M	155.20M	204.20M	485.70M

Allete Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 65.49
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALE, the sentiment is Positive. The current price of 65.49 is above the 20-day moving average (MA) of 65.04, above the 50-day MA of 65.32, and above the 200-day MA of 63.78, indicating a bullish trend. The MACD of <0.01 indicates Negative momentum. The RSI at 56.46 is Neutral, neither overbought nor oversold. The STOCH value of 91.07 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ALE.

Allete Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NWE	73 Outperform	$3.57B	15.15	7.94%	4.38%	4.31%	19.33%
BKH	72 Outperform	$4.39B	15.57	8.13%	4.29%	-8.73%	0.14%
OTTR	68 Neutral	$3.26B	10.88	19.39%	2.45%	-1.38%	2.28%
MGEE	66 Neutral	$3.29B	27.07	10.17%	1.98%	-1.95%	2.33%
ALE	64 Neutral	$3.78B	21.03	6.34%	4.36%	-18.62%	-27.88%
Sector *	63 Neutral	$8.52B	12.04	6.70%	4.34%	3.08%	-11.00%
AVA	56 Neutral	$3.33B	18.16	7.09%	4.61%	10.64%	2.28%

Allete Corporate Events

Allete Appoints Colin Anderson as Chief Accounting Officer

On April 16, 2025, Colin B. Anderson was appointed as ALLETE’s Vice President, Chief Accounting Officer, and Controller. Anderson, who has been with the company since 2021, previously served as Controller and Vice President – ALLETE Tax and Rates. His compensation includes a base salary of $311,725 and a long-term incentive plan opportunity of $125,000, with a mix of restricted stock units and performance share awards. Anderson’s appointment follows the retirement announcement of Steven W. Morris, who remains a Senior Vice President until his planned retirement on July 18, 2025.

Spark’s Take on ALE Stock

According to Spark, TipRanks’ AI Analyst, ALE is a Outperform.

Allete’s overall score is primarily driven by its strong financial performance and positive technical indicators, which reflect solid profitability and market momentum. The approval of a significant merger adds a positive outlook, although the company must address revenue growth and cash flow challenges for sustained success.

To see Spark’s full report on ALE stock, click here.

Allete Appoints Jeffrey Scissons as New CFO

On March 11, 2025, ALLETE, Inc. announced the appointment of Jeffrey J. Scissons as Vice President, Chief Financial Officer, and Corporate Treasurer, succeeding Steven W. Morris, who plans to retire in July 2025. Mr. Scissons has been with ALLETE since 2013, holding various leadership roles, including Vice President and Corporate Treasurer, and brings extensive experience in corporate development and clean energy strategy.