ALLETE (NYSE: ALE) and Cleco Corporate (NYSE:CNL) are both mid-cap utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, profitability, earnings, dividends, analyst recommendations and valuation.
This table compares ALLETE and Cleco Corporate’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
ALLETE pays an annual dividend of $2.24 per share and has a dividend yield of 3.3%. Cleco Corporate pays an annual dividend of $1.60 per share and has a dividend yield of 2.9%. ALLETE pays out 71.8% of its earnings in the form of a dividend. Cleco Corporate pays out 72.7% 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 8 consecutive years and Cleco Corporate has increased its dividend for 7 consecutive years. ALLETE is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares ALLETE and Cleco Corporate’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|ALLETE||$1.42 billion||2.48||$172.20 million||$3.12||22.02|
ALLETE has higher revenue and earnings than Cleco Corporate. ALLETE is trading at a lower price-to-earnings ratio than Cleco Corporate, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
ALLETE has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500. Comparatively, Cleco Corporate has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500.
Insider & Institutional Ownership
73.6% of ALLETE shares are owned by institutional investors. 0.4% of ALLETE shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
This is a breakdown of current ratings for ALLETE and Cleco Corporate, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
ALLETE currently has a consensus price target of $72.08, suggesting a potential upside of 4.91%. Given ALLETE’s higher possible upside, research analysts clearly believe ALLETE is more favorable than Cleco Corporate.
ALLETE beats Cleco Corporate on 9 of the 14 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.
Cleco Corporate Company Profile
Cleco Corporate Holdings LLC, formerly Cleco Corporation, is a public utility holding company. The Company’s segments include Cleco Power and Other. Cleco Power is a regulated electric utility company that owns over 10 generating units with a total nameplate capacity of approximately 3,330 megawatts (MW) and serves approximately 287,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi. The Company, through its subsidiaries, owns one transmission substation in Louisiana and one transmission substation in Mississippi. Cleco Power is engaged in the generation, transmission, distribution and sale of electricity within Louisiana. It owns natural gas pipelines and interconnections at all of its generating facilities, which allow it to access various natural gas supply markets and maintain an economical fuel supply for its customers. The Company holds investments in its subsidiary, Cleco Power LLC (Cleco Power).
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