ALE
ALLETE, Inc.
$67.90
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 36.8% above fair value
You pay
$67.90
Bear
$43.43
Fair
$49.63
Bull
$55.84
Bear
$43.43
-36.0%
$3.10 × 14x P/E
Fair
$49.63
-26.9%
$3.10 × 16x P/E
Bull
$55.84
-17.8%
$3.10 × 18x P/E
Adjust Assumptions
16.0x
3.1$
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
21.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (16 analysts)
$58.00
Divergence from AlphaVal
14%
Summary
Applying a 16x P/E to adjusted EPS of $3.10, the base-case value is $49.63 per share. DDM cross-check: $58.60.
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