Contrasting Portland General Electric (POR) & Allete (ALE)

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

Profitability

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

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

Dividends

Portland General Electric pays an annual dividend of $1.36 per share and has a dividend yield of 3.0%. Allete pays an annual dividend of $2.14 per share and has a dividend yield of 2.7%. Portland General Electric pays out 60.7% of its earnings in the form of a dividend. Allete pays out 63.1% 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. Portland General Electric has increased its dividend for 11 consecutive years and Allete has increased its dividend for 6 consecutive years. Portland General Electric is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

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

Institutional and Insider Ownership

93.2% of Portland General Electric shares are held by institutional investors. Comparatively, 71.0% of Allete shares are held by institutional investors. 0.6% of Portland General Electric shares are held by company insiders. Comparatively, 0.4% of Allete shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Portland General Electric $1.99 billion 2.06 $687.00 million $2.24 20.57
Allete $1.41 billion 2.83 $412.30 million $3.39 23.10

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.

Analyst Ratings

This is a summary of recent recommendations for Portland General Electric and Allete, as provided by MarketBeat.com.

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

Portland General Electric currently has a consensus price target of $42.00, indicating a potential downside of 8.83%. Allete has a consensus price target of $77.50, indicating a potential downside of 1.03%. Given Allete’s stronger consensus rating and higher possible upside, analysts clearly 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 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.

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.

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