TSC Ratings' Updates: Cadence

The following ratings changes were generated on Friday, Dec. 12.

We've downgraded Allete(ALE Quote), which engages in the generation, transmission, distribution and marketing of electrical power, from buy to hold. Strengths include its increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, we also find weaknesses including disappointing return on equity, a decline in the stock price during the past year and poor profit margins.

Net income increased by 49.7% compared with the same quarter one year prior, rising from $16.5 million to $24.7 million and outperforming the S&P 500 and the electric utilities industry. Revenue slight increased by 0.4%, underperforming the industry average of 9.7% but boosting EPS. Net operating cash flow has slightly increased to $47.10 million, or 2.16% compared with the same quarter last year, but Allete's cash flow growth rate is still lower than the industry average growth rate of 25.13%. Return on equity slightly decreased, implying a minor weakness in the organization and underperforming both the industry and the S&P 500. ...