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DULUTH, Minn. – ALLETE, Inc. (NYSE: ALE) reported a mixed financial outcome for the fourth quarter, with earnings per share (EPS) falling short of analyst expectations, while the company’s revenue also declined compared to consensus estimates. The energy company announced a fourth-quarter EPS of $0.89, which was $0.08 below the analyst estimate of $0.97. Revenue for the quarter was reported at $402.7 million, trailing the consensus estimate of $425.21 million.
ALLETE’s full-year earnings for 2023 stood at $4.30 per share on net income of $247.1 million, with operating revenue reaching $1.9 billion. These results represent an increase from the reported 2022 earnings of $3.38 per share on net income of $189.3 million and operating revenue of $1.6 billion. The company’s performance was influenced by strategic initiatives and investments in clean energy, as highlighted by ALLETE Chair, President, and CEO Bethany Owen. She noted the company’s “Sustainability in Action” strategy and the updated five-year capital expenditure plan, which now totals $4.3 billion, indicating a focus on regulated renewable and transmission projects.
Despite the year-over-year (YoY) growth, ALLETE’s stock experienced a slight decline of 1.6% following the earnings release, driven by the company’s 2024 EPS guidance, which was set below the analyst consensus of $4.08. The company initiated its 2024 earnings guidance range of $3.60 to $3.90 per share, indicating potential challenges ahead.
ALLETE’s regulated operations, including Minnesota Power and Superior Water, Light and Power, recorded a net income of $147.2 million for the year, marginally lower than the $149.9 million in 2022. The decrease in net income was primarily due to higher operating expenses and less favorable weather conditions impacting sales. However, increased sales to industrial customers and lower property tax expenses provided some offset.
ALLETE Clean Energy’s net income for 2023 was notably higher at $71.7 million, compared to $16.3 million in 2022, benefiting from a favorable arbitration award and the sale of the Red Barn project. However, these positive results were partially offset by low wind resources and a network outage impacting one of its facilities.
The company’s Corporate and Other businesses, including New Energy Equity and BNI Energy, reported a net income increase to $28.2 million in 2023 from $23.1 million in 2022. This was attributed to more renewable development projects closed during the year and earnings from solar projects placed into service.
ALLETE’s CFO, Steve Morris, acknowledged that the consolidated 2023 earnings were in line with the revised and higher guidance for the year, despite negative weather impacts in the fourth quarter. He also mentioned the regulated businesses’ performance within the guidance range and the strong financial results from ALLETE Clean Energy, which were positively impacted by the arbitration award.
InvestingPro Insights
ALLETE, Inc. (NYSE: ALE) has demonstrated a commitment to sustainable growth and shareholder returns, as evidenced by its recent financial performance and strategic initiatives. Here are some insights based on real-time data and InvestingPro Tips that investors might find useful:
InvestingPro Data:
- The company’s market capitalization stands at $3.31 billion, reflecting its size and stability in the market.
- With a P/E ratio of 13.31 and an adjusted P/E ratio for the last twelve months as of Q3 2023 at 16.65, ALLETE is trading at a low earnings multiple, which could indicate that the stock is undervalued relative to its earnings.
- The dividend yield as of early 2024 is 4.81%, showcasing the company’s consistent return to shareholders.
InvestingPro Tips:
- ALLETE has a high shareholder yield, which is a positive sign for investors looking for income-generating investments.
- The company has a strong track record of raising its dividend, with increases for 13 consecutive years, and has maintained dividend payments for an impressive 54 consecutive years. This is indicative of ALLETE’s financial health and its management’s confidence in the company’s steady cash flow.
Investors seeking to delve deeper into ALLETE’s financials and future prospects can find additional insights on InvestingPro. There are 9 more InvestingPro Tips available, which could provide a more nuanced understanding of the company’s performance and potential. For those interested, remember to use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
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This story originally appeared on Investing
