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Allete Inc (ALE)
NYSE:ALE

Allete (ALE) AI Stock Analysis

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AL

Allete

(NYSE:ALE)

64Neutral
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 (ALE) vs. S&P 500 (SPY)

Allete Business Overview & Revenue Model

Company DescriptionALLETE, 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 MoneyAllete 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
75
Positive
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
70
Positive
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
65
Positive
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 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.53B1.88B1.57B1.42B1.17B
Gross Profit
1.17B489.90M446.80M453.50M424.80M
EBIT
160.10M180.90M134.20M151.30M150.90M
EBITDA
486.30M539.40M417.50M411.70M405.50M
Net Income Common Stockholders
179.30M247.10M131.30M169.20M174.20M
Balance SheetCash, Cash Equivalents and Short-Term Investments
32.80M71.90M36.40M45.10M44.30M
Total Assets
6.75B6.66B6.85B6.43B6.08B
Total Debt
1.80B1.79B1.93B1.99B1.82B
Net Debt
1.77B1.72B1.90B1.95B1.77B
Total Liabilities
3.36B3.25B3.50B3.49B3.28B
Stockholders Equity
2.85B2.81B2.69B2.41B2.29B
Cash FlowFree Cash Flow
102.20M314.10M800.00K-209.80M-418.00M
Operating Cash Flow
457.10M585.30M221.30M263.50M299.80M
Investing Cash Flow
-340.70M-283.60M-384.00M-485.20M-812.80M
Financing Cash Flow
-140.60M-262.50M155.20M204.20M485.70M

Allete Technical Analysis

Technical Analysis Sentiment
Positive
Last Price65.49
Price Trends
50DMA
65.32
Positive
100DMA
64.90
Positive
200DMA
63.78
Positive
Market Momentum
MACD
<0.01
Negative
RSI
56.46
Neutral
STOCH
91.07
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 Risk Analysis

Allete disclosed 29 risk factors in its most recent earnings report. Allete reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Allete Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
NWNWE
73
Outperform
$3.57B15.157.94%4.38%4.31%19.33%
BKBKH
72
Outperform
$4.39B15.578.13%4.29%-8.73%0.14%
68
Neutral
$3.26B10.8819.39%2.45%-1.38%2.28%
66
Neutral
$3.29B27.0710.17%1.98%-1.95%2.33%
ALALE
64
Neutral
$3.78B21.036.34%4.36%-18.62%-27.88%
63
Neutral
$8.52B12.046.70%4.34%3.08%-11.00%
AVAVA
56
Neutral
$3.33B18.167.09%4.61%10.64%2.28%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ALE
Allete
65.49
7.29
12.53%
AVA
Avista
41.47
6.46
18.45%
BKH
Black Hills
60.90
7.36
13.75%
MGEE
MGE Energy
90.42
11.72
14.89%
NWE
Northwestern
58.23
9.69
19.96%
OTTR
Otter Tail
79.38
-5.70
-6.70%

Allete Corporate Events

Executive/Board Changes
Allete Appoints Colin Anderson as Chief Accounting Officer
Neutral
Apr 16, 2025

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.

Executive/Board Changes
Allete Appoints Jeffrey Scissons as New CFO
Neutral
Mar 11, 2025

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.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.