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Earnings Preview: ALLETE Inc. - Analyst Blog

Posted: 2/12/2013 4:00:00 PM
Referenced Stocks: ALE;CNP;ESP;NVE;PCG

ALLETE Inc. ( ALE ) is slated to release its fourth quarter 2012 financial results before the market bell on Feb 15, 2013. In the last reported quarter, the power generation, transmission and distribution company posted a positive earnings surprise of 6.85%. Let's see how things are shaping up at ALLETE prior to this announcement.

Factors to Consider This Quarter

We believe the environmental modernization program at Minnesota Power's Boswell Unit 4 could shove up cost thereby creating margin pressure. Moreover, regulatory obligations will continue to put stress on the company's growth trajectory.

However, we anticipate the commencement of operations at the Magnetation facility, a partnership venture with Steel Dynamics of Indiana and the Bison 2 and 3 renewable projects could to a certain extent mitigate the aforementioned negatives.

Earnings Whispers

Our proven model does not conclusively show that ALLETE is likely to beat earnings this quarter. This is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method ) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here.

Negative Zacks ESP: This is because the Most Accurate estimate stands at 74 cents per share while the Zacks Consensus Estimate is higher at 75 cents, resulting in -1.33% ESP.

Zacks Rank #3 (Hold) : ALLETE's Zacks Rank #3 when combined with negative ESP makes surprise prediction difficult. We caution investors against the stock going into the earnings announcement, as a negative Zacks ESP lowers the possibility of an earnings surprise.

Other Stocks to Consider

Other companies you may want to consider on the basis of our model which shows that they have the right combination of elements to post an earnings beat this quarter are as follows:

NV Energy Inc. ( NVE ) has earnings ESP of +14.29% and carries a Zacks Rank #3 (Hold).

PG&E Corporation ( PCG ) has earnings ESP of +1.75% and carries a Zacks Rank #3 (Hold).

CenterPoint Energy Inc .  ( CNP ) has earnings ESP of +14.29% and carries a Zacks Rank #3 (Hold).

ALLETE INC (ALE): Free Stock Analysis Report

CENTERPOINT EGY (CNP): Free Stock Analysis Report

NV ENERGY INC (NVE): Free Stock Analysis Report

PG&E CORP (PCG): Free Stock Analysis Report

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