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

Earnings & Valuation

This table compares Allete and Portland General Electric’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Allete $1.41 billion 2.86 $412.30 million $3.39 23.32
Portland General Electric $1.99 billion 2.09 $687.00 million $2.24 20.85

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

Dividends

Allete pays an annual dividend of $2.14 per share and has a dividend yield of 2.7%. Portland General Electric pays an annual dividend of $1.36 per share and has a dividend yield of 2.9%. Allete pays out 63.1% of its earnings in the form of a dividend. Portland General Electric pays out 60.7% 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 increased its dividend for 11 consecutive years and Portland General Electric has increased its dividend for 6 consecutive years. Portland General Electric is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Allete and Portland General Electric’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allete 12.09% 9.21% 3.65%
Portland General Electric 10.06% 8.48% 2.64%

Insider & Institutional Ownership

71.0% of Allete shares are held by institutional investors. Comparatively, 93.2% of Portland General Electric shares are held by institutional investors. 0.4% of Allete shares are held by company insiders. Comparatively, 0.6% of Portland General Electric shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Allete has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500. Comparatively, Portland General Electric has a beta of 0.28, indicating that its stock price is 72% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Allete and Portland General Electric, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allete 0 2 2 0 2.50
Portland General Electric 4 3 0 0 1.43

Allete currently has a consensus price target of $77.50, indicating a potential downside of 1.97%. Portland General Electric has a consensus price target of $42.00, indicating a potential downside of 10.06%. Given Allete’s stronger consensus rating and higher probable upside, analysts plainly believe Allete is more favorable than Portland General Electric.

Summary

Allete beats Portland General Electric on 10 of the 17 factors compared between the two stocks.

About Allete

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.

About Portland General Electric

Portland General Electric Company is an electric utility that is engaged in the wholesale purchase, transmission, distribution and retail sale of electricity in the State of Oregon. Its service area allocation of approximately 4,000 square miles is located entirely within Oregon and includes approximately 51 incorporated cities, of which Portland and Salem. It has five natural gas-fired generating facilities, which include Port Westward Unit 1 (PW1), Port Westward Unit 2 (PW2), Beaver natural gas-fired generating plant (Beaver), Coyote Springs Unit 1 (Coyote Springs) and Carty natural gas-fired generating plant (Carty). As of December 31, 2016, the Company owned and operated two wind farms, Biglow Canyon Wind Farm (Biglow Canyon) and Tucannon River Wind Farm (Tucannon River). The Company’s hydroelectric projects consist of Pelton/Round Butte on the Deschutes River near Madras, Oregon, four plants on the Clackamas River, and one on the Willamette River.

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