Allete (ALE) To Report Q1 Earnings: Will The Stock Surprise?

Allete, Inc. (NYSE:ALE) is scheduled to report first-quarter 2017 results before the opening bell on May 4. Last quarter, the company delivered a positive earnings surprise of 21.92%. Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Allete filed for a base rate increase with Minnesota Public Utilities Commission. The commission approved an interim rate increase in late Dec 2016, effective Jan 1, 2017. This will add about $34.7 million annually to the company’s top line and also boost first-quarter revenues.

The company also expects industrial sales to increase to 7–7.5 million megawatt hours in 2017 from 6.5 million megawatt hours last year. The rise in steel production is primary behind the uptick in industrial demand for electricity. The company is expected to benefit from it throughout the year.

Earnings Whispers

Our proven model does not conclusively show that Allete is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: Allete has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 95 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Allete, Inc. Price and EPS Surprise

Allete, Inc. Price and EPS Surprise | Allete, Inc. Quote

Zacks Rank: Allete’s Zacks Rank #3 increases the predictive power of ESP. However, its 0.00% ESP makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are some other stocks from the Utility – Electric Power industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

PPL Corporation (NYSE:PPL) has an Earnings ESP of +1.61% and a Zacks Rank #3. It is slated to report first-quarter 2017 result on May 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dominion Resources, Inc. (NYSE:D) has an Earnings ESP of +2.15% and a Zacks Rank #3. It is slated to report first-quarter 2017 result on May 4.

Pattern Energy Group Inc. (NASDAQ:PEGI) has an Earnings ESP of +250% and a Zacks Rank #3. The company is scheduled to come up with first-quarter 2017 earnings report on May 9.

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