Head-To-Head Contrast: Allete (ALE) and Pepco (POM)

Allete (NYSE: ALE) and Pepco (NYSE:POM) are both mid-cap utilities companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, institutional ownership, risk, valuation, dividends, earnings and analyst recommendations.

Valuation & Earnings

This table compares Allete and Pepco’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Allete $1.34 billion 3.00 $155.30 million $3.46 22.73
Pepco N/A N/A N/A $1.25 21.54

Allete has higher revenue and earnings than Pepco. Pepco is trading at a lower price-to-earnings ratio than Allete, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Allete and Pepco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allete 12.31% 9.21% 3.71%
Pepco 10.52% 11.08% 2.95%

Dividends

Allete pays an annual dividend of $2.14 per share and has a dividend yield of 2.7%. Pepco pays an annual dividend of $1.08 per share and has a dividend yield of 4.0%. Allete pays out 61.8% of its earnings in the form of a dividend. Pepco pays out 86.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Allete has increased its dividend for 6 consecutive years.

Institutional & Insider Ownership

73.1% of Allete shares are owned by institutional investors. 0.4% of Allete shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations and price targets for Allete and Pepco, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allete 1 2 0 0 1.67
Pepco 0 0 0 0 N/A

Allete presently has a consensus price target of $77.67, indicating a potential downside of 1.25%. Given Allete’s higher probable upside, equities research analysts clearly believe Allete is more favorable than Pepco.

Summary

Allete beats Pepco on 9 of the 11 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.

Pepco Company Profile

Pepco Holdings LLC, formerly Pepco Holdings, Inc., is a holding company. The Company, through its utility subsidiaries, is engaged in the transmission, distribution and default supply of electricity, and the distribution and supply of natural gas. The Company’s segments include Power Delivery, Pepco Energy Services, and Corporate and Other. The Company’s subsidiaries include Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL) and Atlantic City Electric Company (ACE). Pepco is engaged in the transmission, distribution and default supply of electricity. DPL is involved in the transmission, distribution and default supply of electricity, and distribution and supply of natural gas. ACE is engaged in the transmission, distribution and default supply of electricity. The Company’s subsidiaries own and operate a network of wires, substations and other equipment that are classified as transmission facilities, distribution facilities or common facilities.

Receive News & Ratings for Allete Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Allete Inc. and related companies with MarketBeat.com's FREE daily email newsletter.

Latest News

Leave a Reply