ALLETE Inc (ALE, Financial) has recently experienced a notable uptick in its stock performance, with a 9.35% gain over the past week and an impressive 14.67% gain over the past three months. The company's market capitalization stands at $3.49 billion, and the current stock price is $60.76. When compared to the GF Value of $77.75, ALLETE is currently considered modestly undervalued. This is a positive shift from the past GF Value of $80.6, which suggested that investors should think twice as the stock might have been a possible value trap. These recent gains and valuation adjustments indicate a growing investor confidence in ALLETE's market position and future prospects.
Introduction to ALLETE Inc
ALLETE Inc, operating within the regulated utilities industry, is a key provider of competitively-priced energy in America's Upper Midwest. The company's business is divided into two main segments: Regulated Operations, which includes regulated utilities such as Minnesota Power and SWL&P, and ALLETE Clean Energy, which focuses on developing and operating renewable energy projects. ALLETE's investment in transmission infrastructure and energy-centric businesses positions it well for growth in the evolving energy sector. 
Assessing ALLETE's Profitability
ALLETE's profitability is robust, with a Profitability Rank of 7/10, indicating a strong likelihood of continued profitable operations. The company's operating margin stands at 9.01%, which is better than 39.88% of 509 companies in the industry. With a return on equity (ROE) of 9.08% and a return on assets (ROA) of 3.68%, ALLETE outperforms more than half of its industry peers. The return on invested capital (ROIC) is 2.52%, surpassing 28.74% of competitors. Notably, ALLETE has maintained profitability for the past 10 years, a testament to its financial stability and operational efficiency.
Growth Trajectory of ALLETE
The Growth Rank for ALLETE is 4/10, reflecting a mixed performance in terms of revenue and earnings growth. The company's 3-year revenue growth rate per share is 5.30%, which is better than 36.55% of 487 companies in the same industry. However, the 5-year revenue growth rate per share shows a slight decline of 0.70%. The 3-year EPS without NRI growth rate is 1.50%, and the 5-year EPS without NRI growth rate is -0.40%. These figures suggest that while ALLETE has experienced some growth, it has also faced challenges that have impacted its long-term earnings potential.
Key Stakeholders in ALLETE
ALLETE's shareholder base includes notable investment firms and individuals. HOTCHKIS & WILEY is the leading holder with 189,312 shares, representing a 0.33% stake in the company. Keeley-Teton Advisors, LLC (Trades, Portfolio) holds 76,367 shares, accounting for 0.13% of ALLETE's shares. Additionally, renowned investor Joel Greenblatt (Trades, Portfolio) has invested in ALLETE, holding 42,446 shares, which equates to a 0.07% share percentage. These significant holders reflect a vote of confidence in ALLETE's market strategy and future direction.
Competitive Landscape
ALLETE operates in a competitive industry, with close competitors such as Otter Tail Corp (OTTR, Financial) with a market cap of $3.18 billion, NorthWestern Energy Group Inc (NWE, Financial) at $3.17 billion, and Black Hills Corp (BKH, Financial) with a market cap of $3.63 billion. These companies are closely matched in terms of market capitalization, indicating a highly competitive environment where ALLETE must continue to innovate and efficiently manage its resources to maintain and enhance its market position.
Conclusion
In summary, ALLETE Inc's recent stock performance has been positive, with significant gains over the past week and three months. The company's current valuation suggests it is modestly undervalued, presenting a potential opportunity for investors. ALLETE's consistent profitability and a decade of financial stability, despite some growth challenges, position it as a resilient player in the regulated utilities industry. The company's significant holders, including respected investment firms and individuals, underscore the confidence in its strategic direction. When compared to its competitors, ALLETE's market cap is competitive, but it must continue to navigate a challenging landscape to sustain its growth and profitability.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
