Is ALLETE, Inc. overvalued or undervalued?

As of 30 June 2025, the valuation grade for ALLETE, Inc. has moved from expensive to very expensive, indicating a significant increase in perceived overvaluation. The company is currently overvalued, as evidenced by its P/E ratio of 32, which is notably higher than peers like Pinnacle West Capital Corp. at 24.26 and The AES Corp. at 25.28. Additionally, ALLETE's EV to EBITDA stands at 12.62, while the industry average is reflected in its peers, such as OGE Energy Corp. with an EV to EBITDA of 10.71.
In terms of returns, ALLETE's performance has lagged behind the S&P 500 across multiple periods, with a year-to-date return of -1.10% compared to the S&P's 12.22%, and a three-year return of 10.25% versus the S&P's impressive 70.41%. This underperformance further supports the conclusion that ALLETE is overvalued in the current market environment.