Allete (ALE) AI Stock Analysis

• Market Cap: $3.79B
• Dividend Yield: 4.36%
• Average Volume (3M): 334.83K
• Price to Earnings (P/E): 21.1
• Beta (1Y): 0.24
• Revenue Growth: -18.62%
• EPS Growth: -27.88%
• Country: US
• Employees: 1,616
• Sector: Utilities
• Sector Strength: 79
• Industry: Regulated Utilities
• EPS (TTM): 3.10
• Shares Outstanding: 57,901,154
• 10 Day Avg. Volume: 335,646
• 30 Day Avg. Volume: 334,832
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.47
• Price to Cash Flow (P/CF): 10.50
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $67.00
• Price Target Upside: 2.65% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 0

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.

Allete Business Overview & Revenue Model

Company Description

Allete Inc. (ALE) is an energy company based in Duluth, Minnesota, primarily engaged in the generation, transmission, and distribution of electricity. The company operates through several segments, including Regulated Operations, which encompasses its utility operations in Minnesota and Wisconsin through Minnesota Power and Superior Water, Light and Power, and its Clean Energy segment, BNI Energy, which provides lignite coal to Minnesota Power and other industrial customers. Allete is committed to providing sustainable energy solutions, including investments in renewable energy projects and infrastructure.

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: 65.27
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 65.27 is below the 20-day moving average (MA) of 65.40, above the 50-day MA of 64.89, and above the 200-day MA of 62.95, indicating a neutral trend. The MACD of 0.16 indicates Positive momentum. The RSI at 50.38 is Neutral, neither overbought nor oversold. The STOCH value of 14.33 is Positive, 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
CMS	78 Outperform	$21.63B	21.74	12.72%	2.91%	0.71%	11.07%
IDA	74 Outperform	$6.13B	20.68	9.27%	3.01%	3.48%	6.67%
ALE	73 Outperform	$3.79B	21.11	6.34%	4.36%	-18.62%	-27.88%
AEP	73 Outperform	$55.13B	18.51	11.37%	3.53%	2.76%	31.53%
LNT	72 Outperform	$16.28B	23.61	10.01%	3.13%	-1.12%	-3.22%
XEL	69 Neutral	$39.49B	19.99	10.43%	3.24%	-5.25%	7.11%
Sector *	65 Neutral	$12.05B	15.92	6.71%	4.32%	8.04%	3.76%

Allete Corporate Events

Allete Announces CFO Steven Morris’ Retirement Plan

Allete, Inc. announced the planned retirement of Steven W. Morris, Senior Vice President and Chief Financial Officer, effective July 18, 2025. Mr. Morris, who has been with the company in various financial roles since 2014, will remain through the transition period, ensuring an orderly handover of responsibilities.

Allete’s $6.2 Billion Merger Gains Regulatory Approval

ALLETE, Inc. announced that the Federal Energy Regulatory Commission has approved its proposed transaction with Canada Pension Plan Investment Board and Global Infrastructure Partners. This approval is a major step towards finalizing the $6.2 billion merger, expected to close in mid-2025, which will see ALLETE becoming a subsidiary of Alloy Parent LLC. The transaction is anticipated to enhance long-term energy and infrastructure investments while maintaining local management and regulatory oversight. Importantly, the acquisition is not expected to affect retail or municipal rates for utility customers.