Head-To-Head Analysis: Allete (ALE) & WEC Energy Group (WEC)
Allete (NYSE: ALE) and WEC Energy Group (NYSE:WEC) are both mid-cap utilities companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, analyst recommendations, risk, earnings and profitability.
Allete pays an annual dividend of $2.14 per share and has a dividend yield of 2.8%. WEC Energy Group pays an annual dividend of $2.08 per share and has a dividend yield of 3.1%. Allete pays out 61.8% of its earnings in the form of a dividend. WEC Energy Group pays out 68.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Allete has raised its dividend for 6 consecutive years and WEC Energy Group has raised its dividend for 6 consecutive years.
Insider & Institutional Ownership
70.6% of Allete shares are held by institutional investors. Comparatively, 70.2% of WEC Energy Group shares are held by institutional investors. 0.4% of Allete shares are held by insiders. Comparatively, 1.0% of WEC Energy Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Volatility and Risk
Allete has a beta of 0.47, suggesting that its share price is 53% less volatile than the S&P 500. Comparatively, WEC Energy Group has a beta of 0.14, suggesting that its share price is 86% less volatile than the S&P 500.
This is a summary of recent ratings and price targets for Allete and WEC Energy Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|WEC Energy Group||1||6||0||0||1.86|
Allete presently has a consensus price target of $76.67, indicating a potential upside of 0.43%. WEC Energy Group has a consensus price target of $63.17, indicating a potential downside of 7.00%. Given Allete’s higher probable upside, equities research analysts plainly believe Allete is more favorable than WEC Energy Group.
Valuation & Earnings
This table compares Allete and WEC Energy Group’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Allete||$1.34 billion||2.91||$155.30 million||$3.46||22.06|
|WEC Energy Group||$7.47 billion||2.87||$940.20 million||$3.04||22.34|
WEC Energy Group has higher revenue and earnings than Allete. Allete is trading at a lower price-to-earnings ratio than WEC Energy Group, indicating that it is currently the more affordable of the two stocks.
This table compares Allete and WEC Energy Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|WEC Energy Group||12.79%||10.62%||3.18%|
WEC Energy Group beats Allete on 8 of the 15 factors compared between the two stocks.
Allete Company Profile
ALLETE, Inc. is an energy company. The Company’s segments include Regulated Operations, ALLETE Clean Energy, Inc. (ALLETE Clean Energy), U.S. Water Services Holding Company (U.S. Water Services), and Corporate and Other. The Regulated Operations segment includes its regulated utilities, Minnesota Power, and Superior Water, Light and Power Company, and its investment in American Transmission Company LLC. The ALLETE Clean Energy segment focuses on developing, acquiring and operating clean and renewable energy projects. The U.S. Water Services provides integrated water management for industry by combining chemical, equipment, engineering and service for customized solution. As of December 31, 2016, its Corporate and Other consisted of BNI Energy, Inc. (BNI Energy), its coal mining operations in North Dakota, ALLETE Properties, LLC (ALLETE Properties), its Florida real estate investment and approximately 5,000 acres of land in Minnesota.
WEC Energy Group Company Profile
WEC Energy Group, Inc. was a diversified holding company with natural gas and electric utility operations, an approximately 60% equity ownership interest in American Transmission Company LLC, and non-utility electric operations through its We Power business, as of December 31, 2016. Its segments include Wisconsin; Illinois; Other States; Electric Transmission; We Power, and Corporate and Other. Wisconsin includes the electric and natural gas utility operations of Wisconsin Electric Power Company, Wisconsin Gas LLC, and Wisconsin Public Service Corporation, including WE’s and WPS’s electric and natural gas operations in the state of Michigan. Illinois includes the natural gas utility and non-utility operations of The Peoples Gas Light and Coke Company and North Shore Gas Company. Other states includes the natural gas utility and non-utility operations of Minnesota Energy Resources Corporation and Michigan Gas Utilities Corporation.
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