ALE
ALLETE, Inc.
$67.90
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 23.9% above fair value
You pay
$67.90
Bear
$47.96
Fair
$54.81
Bull
$61.67
Bear
$47.96
-29.4%
$3.36 × 14x P/E
Fair
$54.81
-19.3%
$3.36 × 16x P/E
Bull
$61.67
-9.2%
$3.36 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
20.2x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $58.00 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $54.81 per share.
Warnings
The company pays out 93% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples