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

Insider & Institutional Ownership

73.2% of ALLETE shares are held by institutional investors. Comparatively, 84.2% of ITC shares are held by institutional investors. 0.4% of ALLETE shares are held by insiders. Comparatively, 3.2% of ITC shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares ALLETE and ITC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ALLETE 12.31% 9.21% 3.71%
ITC 27.42% 16.62% 3.79%

Earnings and Valuation

This table compares ALLETE and ITC’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ALLETE $1.34 billion 2.80 $155.30 million $3.46 21.23
ITC N/A N/A N/A $1.48 30.74

ALLETE has higher revenue and earnings than ITC. ALLETE is trading at a lower price-to-earnings ratio than ITC, 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 2.9%. ITC pays an annual dividend of $0.86 per share and has a dividend yield of 1.9%. ALLETE pays out 61.8% of its earnings in the form of a dividend. ITC pays out 58.1% 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. ALLETE has increased its dividend for 5 consecutive years and ITC has increased its dividend for 6 consecutive years.

Analyst Ratings

This is a summary of recent recommendations and price targets for ALLETE and ITC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ALLETE 1 2 0 0 1.67
ITC 0 0 0 0 N/A

ALLETE currently has a consensus target price of $77.67, suggesting a potential upside of 5.74%. Given ALLETE’s higher probable upside, equities research analysts plainly believe ALLETE is more favorable than ITC.

Summary

ITC beats ALLETE on 8 of the 12 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 ITC

ITC Holdings Corp. (ITC Holdings) is a holding company. The Company is engaged in owning, operating, maintaining and investing in transmission infrastructure. The Company’s business consists primarily of the electric transmission operations of its Regulated Operating Subsidiaries. Its Regulated Operating Subsidiaries include International Transmission Company (ITCTransmission), Michigan Electric Transmission Company, LLC (METC), ITC Midwest LLC (ITC Midwest). The operations performed by its Regulated Operating Subsidiaries fall into the various categories, such as asset planning; engineering, design and construction; maintenance, and real time operations. Its customers include investor-owned utilities, municipalities, cooperatives, power marketers and alternative energy suppliers. It owns and operates high-voltage systems in Michigan’s Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma.

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