Analyzing Allete (ALE) & Exelon Corporation (EXC)
Allete (NYSE: ALE) and Exelon Corporation (NYSE:EXC) are both mid-cap utilities companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, earnings, risk, valuation, institutional ownership, dividends and analyst recommendations.
Allete pays an annual dividend of $2.14 per share and has a dividend yield of 2.7%. Exelon Corporation pays an annual dividend of $1.31 per share and has a dividend yield of 3.3%. Allete pays out 63.1% of its earnings in the form of a dividend. Exelon Corporation pays out 68.6% 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. Exelon Corporation has raised its dividend for 6 consecutive years. Exelon Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Allete and Exelon Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation & Earnings
This table compares Allete and Exelon Corporation’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Allete||$1.41 billion||2.82||$412.30 million||$3.39||23.01|
|Exelon Corporation||$33.26 billion||1.15||$9.49 billion||$1.91||20.77|
Exelon Corporation has higher revenue and earnings than Allete. Exelon Corporation is trading at a lower price-to-earnings ratio than Allete, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
71.0% of Allete shares are owned by institutional investors. Comparatively, 76.8% of Exelon Corporation shares are owned by institutional investors. 0.4% of Allete shares are owned by insiders. Comparatively, 0.7% of Exelon Corporation shares are owned by 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.
Volatility and Risk
Allete has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500. Comparatively, Exelon Corporation has a beta of 0.29, indicating that its share price is 71% less volatile than the S&P 500.
This is a breakdown of recent recommendations and price targets for Allete and Exelon Corporation, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Allete presently has a consensus target price of $76.33, indicating a potential downside of 2.15%. Exelon Corporation has a consensus target price of $40.46, indicating a potential upside of 1.99%. Given Exelon Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Exelon Corporation is more favorable than Allete.
Exelon Corporation beats Allete on 9 of the 17 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.
Exelon Corporation Company Profile
Exelon Corporation is a utility services holding company. The Company, through its subsidiary, Exelon Generation Company, LLC (Generation), is engaged in the energy generation business. The Company, through its subsidiaries, Commonwealth Edison Company (ComEd), PECO Energy Company (PECO), Baltimore Gas and Electric Company (BGE), Pepco Holdings LLC (PHI), Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL) and Atlantic City Electric Company (ACE), is engaged in the energy delivery businesses. It operates through 12 segments: Generation’s six segments: Mid-Atlantic, Midwest, New England, New York, ERCOT and Other Power Regions; ComEd; PECO; BGE, and PHI’s three utility segments: Pepco, DPL and ACE. Generation’s integrated business consists of the generation, physical delivery and marketing of power across geographical regions through its customer-facing business, Constellation, which sells electricity and natural gas to both wholesale and retail customers.
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