Is ALLETE, Inc. overvalued or undervalued?

As of 30 October 2024, ALLETE, Inc. has moved from an expensive to a very expensive valuation grade. The company is currently overvalued based on its financial ratios and peer comparisons. The P/E ratio stands at 32, significantly higher than the industry average of 20.31 for IDACORP, Inc., which is considered fairly valued. Additionally, ALLETE's EV to EBITDA ratio of 12.62 also exceeds that of its peers, such as PNM Resources, Inc., which has a ratio of 12.53.
In comparison to its peers, ALLETE's ROCE is notably low at 3.53%, while ROE is at 4.17%, indicating inefficiencies relative to its valuation. The company's recent stock performance has lagged behind the S&P 500, with a year-to-date return of -1.54% compared to the index's 2.44%. Overall, these factors suggest that ALLETE, Inc. is overvalued in the current market environment.