ALLETE sets 2024 earnings guidance, plans $4.3B in capital projects

ALLETE, Inc. (NYSE: ALE) has announced its earnings guidance for 2024, projecting a range of $3.60 to $3.90 per share on net income between $210 million and $225 million. The guidance includes anticipated earnings from its Regulated Operations segment of $2.65 to $2.85 per share, and from ALLETE Clean Energy and Corporate and Other operations of $0.95 to $1.05 per share.

The company also revealed an updated five-year capital expenditure plan totaling $4.3 billion, marking a $1 billion increase from its previous plan. This investment is aimed at expanding renewable and transmission projects, with expected earnings growth starting in 2025.

For its Regulated Operations, the guidance reflects interim rates from the Minnesota Power 2023 rate case, amounting to approximately $64 million, which are subject to refund. Industrial sales are projected at about 6.2 million megawatt-hours for 2024, correlating with taconite production estimates of 35 million tons. The segment is also anticipating increased operating and maintenance expenses due to staffing and inflation, as well as higher depreciation and property tax expenses from additional plant service. Further, an investment of around $6 million in the American Transmission Company LLC is included.

ALLETE Clean Energy expects to generate roughly 3.7 million MWh in 2024, assuming normal wind resources. The guidance accounts for a substation network outage near the Caddo wind energy facility in the first quarter of 2024, the sale of Project Whitetail, and higher operating costs. It also includes estimated Production Tax Credits of about $18 million for the year.

The Corporate and Other segment is expected to have a net income of $19 million to $21 million, with similar results from BNI Energy Inc. and Nobles 2 Power Partners, LLC. Slightly lower earnings are anticipated from ALLETE Properties, LLC, and decreased earnings from Minnesota solar investments due to Investment Tax Credits recognized in 2023.

The company anticipates a $0.03 per share dilution due to higher average shares outstanding and expects a consolidated effective income tax expense of about 5 percent for 2024.

This financial outlook is based on a press release statement from ALLETE and reflects the company’s strategic focus on expanding its renewable energy portfolio and infrastructure while navigating regulatory environments.

InvestingPro Insights

As ALLETE, Inc. (NYSE: ALE) sets its sights on a greener future with a significant increase in capital expenditure aimed at renewable and transmission projects, the financial community is closely monitoring the company’s performance metrics. According to InvestingPro data, ALLETE’s market capitalization stands at approximately $3.29 billion USD, reflecting the market’s current valuation of the company. With a solid P/E ratio of 13.25 and an adjusted P/E ratio for the last twelve months as of Q3 2023 at 16.63, ALLETE is trading at a low earnings multiple which suggests a potentially attractive valuation for investors.

InvestingPro Tips highlight that ALLETE has not only raised its dividend for 13 consecutive years but has also maintained dividend payments for an impressive 54 consecutive years. This consistency in rewarding shareholders, paired with a strong dividend yield of 4.81%, may be particularly appealing for income-focused investors. Moreover, the company’s liquid assets surpassing short-term obligations signal a solid financial position, which could reassure stakeholders about ALLETE’s ability to meet its immediate financial commitments.

For those looking to delve deeper into ALLETE’s financial outlook and investment potential, there are additional InvestingPro Tips available, including insights on earnings revisions by analysts and the company’s PEG ratio, which at 0.74 suggests that the stock might be undervalued based on its earnings growth. To access these insights and more, investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. Currently, there are 9 more tips available that could provide a more comprehensive understanding of ALLETE’s investment profile.

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