Critical Contrast: Allete (NYSE:ALE) and Ballard Power Systems (NASDAQ:BLDP)

Ballard Power Systems (NASDAQ:BLDP) and Allete (NYSE:ALE) are both utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Insider & Institutional Ownership

28.0% of Ballard Power Systems shares are owned by institutional investors. Comparatively, 76.6% of Allete shares are owned by institutional investors. 0.2% of Ballard Power Systems shares are owned by company insiders. Comparatively, 0.3% of Allete shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Ballard Power Systems and Allete’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ballard Power Systems	-409.35%	-21.52%	-18.62%
Allete	11.98%	5.71%	2.83%

Risk & Volatility

Ballard Power Systems has a beta of 1.84, meaning that its share price is 84% more volatile than the S&P 500. Comparatively, Allete has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Ballard Power Systems and Allete, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ballard Power Systems	6	11	0	0	1.65
Allete	0	0	1	0	3.00

Ballard Power Systems presently has a consensus target price of $2.11, suggesting a potential downside of 30.24%. Given Ballard Power Systems’ higher probable upside, research analysts plainly believe Ballard Power Systems is more favorable than Allete.

Earnings and Valuation

This table compares Ballard Power Systems and Allete”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ballard Power Systems	$72.51 million	12.56	-$324.24 million	($0.99)	-3.06
Allete	$1.50 billion	2.61	$179.30 million	$2.85	23.68

Allete has higher revenue and earnings than Ballard Power Systems. Ballard Power Systems is trading at a lower price-to-earnings ratio than Allete, indicating that it is currently the more affordable of the two stocks.

Summary

Allete beats Ballard Power Systems on 11 of the 14 factors compared between the two stocks.

About Ballard Power Systems

Ballard Power Systems Inc. engages in the design, development, manufacture, sale, and service of proton exchange membrane (PEM) fuel cell products. The company offers its products for power product comprising for bus, truck, rail, marine, stationary, and emerging market, such as material handling, off-road, and other applications. It also engages in the delivery of services, including technology solutions, after sales services, and training; and provision of engineering services, product and systems integration services, and related technology transfer for a variety of PEM fuel cell applications. It operates in the United States, Germany, Canada, China, Poland, the United Kingdom, the Netherlands, France, Denmark, Belgium, India, Taiwan, Spain, Norway, Australia, Japan, and internationally. The company has a strategic alliance with Linamar Corporation for the co-development and sale of fuel cell powertrains and components for class 1 and 2 vehicles in North America and Europe. Ballard Power Systems Inc. was founded in 1979 and is headquartered in Burnaby, Canada.

About Allete

ALLETE, Inc. operates as an energy company. The company operates through Regulated Operations, ALLETE Clean Energy, and Corporate and Other segments. It generates electricity from coal-fired, biomass co-fired / natural gas, hydroelectric, wind, and solar. In addition, the company provides regulated utility electric services in northwestern Wisconsin to approximately 15,000 electric customers, 13,000 natural gas customers, and 10,000 water customers, as well as regulated utility electric services in northeastern Minnesota to approximately 150,000 retail customers and 14 non-affiliated municipal customers. Further, it owns and maintains electric transmission assets in Wisconsin, Michigan, Minnesota, and Illinois. Additionally, the company focuses on developing, acquiring, and operating clean and renewable energy projects; and owns and operates approximately 1,200 megawatts of wind energy generation facility, as well as involved in the coal mining operations in North Dakota; and real estate investment activities in Florida. It owns and operates 162 substations with a total capacity of 9,980 megavolt amperes. The company serves taconite mining, paper, pulp and secondary wood products, pipeline, and other industries. The company was formerly known as Minnesota Power, Inc. and changed its name to ALLETE, Inc. in May 2001. ALLETE, Inc. was incorporated in 1906 and is headquartered in Duluth, Minnesota.