ALLETE, Inc. (ALE) | Investment Case

1. Company Snapshot

1.a. 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.

Show Full description

1.b. Last Insights on ALE

ALLETE's recent performance was driven by a 3.5% increase in its quarterly dividend to $0.73 per share, reflecting the company's confidence in its growth outlook. The dividend increase is part of ALLETE's track record of more than 75 consecutive years of dividend growth. Additionally, the company's pending acquisition by CPP Investments and GIP at $67 per share offers a potential 11% annual return, making it a higher return investment compared to bank deposits with fairly low risk.

1.c. Company Highlights

Last Price	67.6
Change Percentage	-0.07%
Open	67.64
Previous Close	67.65
Market Cap ( Millions)	3926
Volume	578723
Year High	67.71
Year Low	62.38
M A 50	67.22
M A 200	65.59

FCF Yield	-8.20%
Dividend Yield	4.28%
ROE	5.80%
Debt / Equity	78.44%
Net Debt / EBIDTA	454.86%
Price To Book	1.38
Price Earnings Ratio	23.7
Price To FCF	-12.19
Price To sales	2.62
EV / EBITDA	12.82

2. Transcript Summary

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3. NewsRoom

ALLETE, Inc. Awaits Written Order to Complete Sale to Partners Canada Pension Plan Investment Board and Global Infrastructure Partners; Reports Third Quarter 2025 Earnings

Oct -31

Source: businesswire.com

ALLETE to Announce Third Quarter Financial Results October 31

Oct -28

Source: businesswire.com

Yousif Capital Management LLC Decreases Stock Holdings in Allete, Inc. $ALE

Oct -22

Source: defenseworld.net

ALLETE Obtains Regulatory Approval from Minnesota Public Utilities Commission for Partnership with CPP Investments and Global Infrastructure Partners

Oct -03

Source: businesswire.com

This Dividend Opportunity Is Disappearing Soon: Allete

Sep -24

Source: seekingalpha.com

Allete: Merger Close Doubts Arise, But Buy Rating Maintained

Sep -04

Source: seekingalpha.com

Allete quarterly profit drops on higher operating, interest expense

Aug -07

Source: reuters.com

ALLETE, Inc. Reports Second Quarter 2025 Earnings

Aug -07

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.72%)

6. Segments

Regulated Operations

Expected Growth: 2.5%

ALLETE's Regulated Operations segment growth of 2.5% is driven by increasing electricity demand from industrial and commercial customers, rate base growth from infrastructure investments, and favorable weather patterns. Additionally, the segment benefits from a constructive regulatory environment, allowing for timely recovery of costs and investments.

ALLETE Clean Energy

Expected Growth: 4.0%

ALLETE Clean Energy's 4.0% growth is driven by increasing demand for renewable energy, strategic acquisitions, and expansion of wind energy projects. Additionally, favorable government policies and incentives for clean energy, coupled with declining renewable energy costs, contribute to the segment's growth.

Corporate and Other

Expected Growth: 1.5%

ALLETE's Corporate and Other segment growth of 1.5% is driven by increasing transmission and distribution investments, strategic acquisitions, and cost savings initiatives. Additionally, the company's focus on renewable energy and grid modernization efforts contribute to growth. Furthermore, ALLETE's diversified business model and strong financial position enable the company to invest in growth opportunities and drive long-term value creation.

7. Detailed Products

Electricity

Generation, transmission, and distribution of electricity to residential, commercial, and industrial customers in Minnesota, North Dakota, and Wisconsin.

Real Estate

Development and management of commercial and industrial properties, including industrial parks, office buildings, and retail centers.

Energy Infrastructure and Services

Construction, operation, and maintenance of energy infrastructure, including transmission lines, substations, and distribution systems.

Renewable Energy

Development and operation of wind, solar, and hydroelectric power generation facilities.

8. ALLETE, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

ALLETE, Inc. operates in the utility industry, which has a moderate threat of substitutes. While there are alternative energy sources, such as solar and wind power, they are not yet widely adopted and are often more expensive than traditional energy sources.

Bargaining Power Of Customers

ALLETE, Inc. serves a diverse customer base, including residential, commercial, and industrial customers. However, the company's customers have limited bargaining power due to the lack of alternative energy providers in the region.

Bargaining Power Of Suppliers

ALLETE, Inc. relies on a few large suppliers for fuel and other essential materials. While the company has some bargaining power due to its size, the suppliers also have some leverage due to the specialized nature of their products.

Threat Of New Entrants

The utility industry has high barriers to entry, including significant capital requirements and regulatory hurdles. As a result, the threat of new entrants is low, and ALLETE, Inc. faces limited competition from new market entrants.

Intensity Of Rivalry

ALLETE, Inc. operates in a moderately competitive industry, with a few large players competing for market share. While the company faces some competition, the industry's regulatory framework and high barriers to entry limit the intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	38.97%
Debt Cost	5.18%
Equity Weight	61.03%
Equity Cost	7.66%
WACC	6.69%
Leverage	63.86%

11. Quality Control: ALLETE, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Otter Tail

A-Score: 6.6/10

Value: 5.3

Growth: 7.0

Quality: 6.5

Yield: 6.0

Momentum: 6.0

Volatility: 8.7

1-Year Total Return ->

NorthWestern

A-Score: 6.5/10

Value: 6.1

Growth: 3.4

Quality: 5.1

Yield: 8.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

ALLETE

A-Score: 6.4/10

Value: 5.9

Growth: 4.0

Quality: 4.3

Yield: 8.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

Avista

A-Score: 6.3/10

Value: 6.5

Growth: 4.2

Quality: 4.3

Yield: 8.0

Momentum: 4.5

Volatility: 10.0

1-Year Total Return ->

Black Hills

A-Score: 6.2/10

Value: 5.2

Growth: 4.4

Quality: 4.4

Yield: 8.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

AES

A-Score: 5.1/10

Value: 6.6

Growth: 5.4

Quality: 3.5

Yield: 8.0

Momentum: 3.0

Volatility: 4.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

34.53%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.69%

ALLETE, Inc. - US0185223007

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ALE

1.c. Company Highlights

Average Yield

Medium Volatility

Average Growth

Earnings Miss

Revenues Miss

Strong Momentum

Stable Momentum

Lower Growth

Fairly Valued

Expensive

Average Quality

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.72%)

6. Segments

Regulated Operations

Expected Growth: 2.5%

ALLETE Clean Energy

Expected Growth: 4.0%

Corporate and Other

Expected Growth: 1.5%

7. Detailed Products

Electricity

Real Estate

Energy Infrastructure and Services

Renewable Energy

8. ALLETE, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: ALLETE, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

67.6$

Current Price

67.6$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA