Otter Tail (OTTR) AI Stock Analysis

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Otter Tail

(NASDAQ:OTTR)

73Outperform

Otter Tail's overall stock score reflects its strong financial performance and reasonable valuation, which are tempered by mixed technical indicators and challenges highlighted in the earnings call. The company's robust profitability and strategic growth plans are positives, but uncertainties in some segments and broader economic conditions present risks that need to be monitored.

Positive Factors

Electric Segment Performance

OTTR's electric segment revenue exceeded expectations, showing strong performance in this area of the business.

PVC Pipe Sales

There is an increase in PVC pipe margin estimates due to higher margins on larger-diameter PVC pipe sales.

Negative Factors

Debt Levels

The company's debt increased, reflected in a net debt-to-capital ratio that rose from the previous quarter.

EPS Guidance

The company's EPS guidance for 2025 is significantly lower than previous forecasts.

Tariffs Impact

The company's manufacturing business faced a negative impact from tariffs due to an increase in U.S. steel prices.

Otter Tail (OTTR) vs. S&P 500 (SPY)

Market Cap

$3.35B

Dividend Yield2.41%

Average Volume (3M)242.21K

Price to Earnings (P/E)11.4

Beta (1Y)0.63

Revenue Growth-2.68%

EPS Growth-3.73%

CountryUS

Employees2,133

SectorUtilities

Sector Strength83

IndustryDiversified Utilities

Share Statistics

EPS (TTM)1.62

Shares Outstanding41,904,370

10 Day Avg. Volume234,477

30 Day Avg. Volume242,213

Financial Highlights & Ratios

PEG Ratio-10.19

Price to Book (P/B)2.02

Price to Sales (P/S)0.00

P/FCF Ratio35.89

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$83.00

Price Target Upside3.88% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Otter Tail Business Overview & Revenue Model

Company DescriptionOtter Tail Corporation (OTTR) is a diversified energy company primarily operating in the United States. It is primarily engaged in the utility and manufacturing sectors, with its core business focusing on the generation, transmission, and distribution of electricity in the Upper Midwest region. Additionally, Otter Tail operates manufacturing businesses that produce metal fabrication, plastics, and other industrial components.

How the Company Makes MoneyOtter Tail Corporation generates revenue through its two main segments: Electric and Manufacturing. The Electric segment, which is the primary revenue driver, earns money by providing electricity to residential, commercial, and industrial customers, regulated by state commissions, which allow the company to recover costs and earn a return on investments. This segment involves owning power plants, transmission lines, and distribution networks. The Manufacturing segment contributes to revenue through the production and sale of metal fabrication, plastics, and other industrial components. This includes partnerships with various industries requiring custom metal parts and plastic products, contributing to a diversified revenue stream beyond its utility operations.

Otter Tail Financial Statement Overview

Summary

Otter Tail maintains a steady financial performance with strong profitability and operational efficiency metrics. The company's balance sheet reflects a healthy equity position, though increasing debt levels warrant attention. Cash flow remains strong, underscoring the company's ability to generate cash despite high capital expenditures. Continued focus on revenue growth and debt management will be crucial for sustained financial health.

Income Statement

Positive

Otter Tail has demonstrated strong revenue growth over the years, with a notable increase from 2020 to 2021. The company maintains robust gross profit margins, achieving 100% in 2024 due to the nature of reported data, and strong net profit margins, peaking at 22.68% in 2024. EBITDA and EBIT margins also reflect solid operational efficiency. However, the revenue growth rate has declined in recent years, indicating potential market saturation or competitive pressures.

Balance Sheet

Positive

The balance sheet reveals a controlled level of debt with a debt-to-equity ratio fluctuating but remaining manageable. The company has seen an increase in stockholders' equity, resulting in an improving equity ratio from 38.37% in 2020 to 45.69% in 2024, indicating financial stability. However, the increasing total debt could pose risks if not managed carefully alongside these equity gains.

Cash Flow

Positive

Cash flow analysis shows a strong operating cash flow to net income ratio, peaking at 1.50 in 2024, suggesting robust cash-generating capabilities. Free cash flow has fluctuated, with a significant dip in 2024, influenced by high capital expenditures. Despite this, the overall trend in operating cash flow is positive, highlighting effective cash management amidst substantial investments.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.33B	1.35B	1.46B	1.20B	890.11M
	Gross Profit
583.10M	565.15M	570.50M	424.07M	302.01M
	EBIT
380.25M	377.92M	390.44M	249.71M	147.89M
	EBITDA
515.83M	499.12M	486.15M	341.95M	232.54M
	Net Income Common Stockholders
301.66M	294.19M	284.18M	176.77M	95.85M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
294.65M	230.37M	119.00M	1.54M	1.16M
	Total Assets
3.65B	3.24B	2.90B	2.75B	2.58B
	Total Debt
1.01B	905.48M	832.02M	855.16M	845.52M
	Net Debt
718.70M	675.11M	713.03M	853.62M	844.35M
	Total Liabilities
1.98B	1.80B	1.68B	1.76B	1.71B
	Stockholders Equity
1.67B	1.44B	1.22B	990.78M	870.97M
Cash Flow		Free Cash Flow
94.08M	117.36M	218.18M	59.41M	-159.63M
	Operating Cash Flow
452.73M	404.50M	389.31M	231.24M	211.92M
	Investing Cash Flow
-411.37M	-289.29M	-175.07M	-171.51M	-375.65M
	Financing Cash Flow
22.92M	-3.83M	-96.78M	-59.36M	143.69M

Otter Tail Technical Analysis

Technical Analysis Sentiment

Positive

Last Price79.90

Price Trends

50DMA

79.04

Positive

100DMA

77.95

Positive

200DMA

78.79

Positive

Market Momentum

MACD

-0.12

Negative

RSI

56.34

Neutral

STOCH

66.76

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OTTR, the sentiment is Positive. The current price of 79.9 is above the 20-day moving average (MA) of 77.95, above the 50-day MA of 79.04, and above the 200-day MA of 78.79, indicating a bullish trend. The MACD of -0.12 indicates Negative momentum. The RSI at 56.34 is Neutral, neither overbought nor oversold. The STOCH value of 66.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OTTR.

Otter Tail Risk Analysis

Otter Tail disclosed 35 risk factors in its most recent earnings report. Otter Tail reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Otter Tail Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MGEE	75 Outperform	$3.38B	26.22	10.62%	1.92%	6.03%	6.15%
OTTR	73 Outperform	$3.35B	11.38	18.38%	2.41%	-2.68%	-3.73%
NWE	73 Outperform	$3.44B	14.59	7.94%	4.65%	4.31%	19.33%
BKH	69 Neutral	$4.24B	14.93	8.02%	4.49%	3.28%	-3.49%
ALE	67 Neutral	$3.78B	20.43	6.49%	4.37%	-11.15%	-23.41%
AVA	67 Neutral	$3.14B	16.59	7.25%	4.92%	3.14%	-2.66%
Sector *	63 Neutral	$8.53B	10.18	4.66%	4.38%	3.77%	-12.97%

* Utilities Sector Average

Performance Comparison

OTTR

Otter Tail

79.77

-9.93

-11.07%

ALE

Allete

65.13

4.24

6.96%

AVA

Avista

38.95

2.94

8.16%

BKH

Black Hills

58.49

4.12

7.58%

MGEE

MGE Energy

92.60

12.83

16.08%

NWE

Northwestern

56.09

5.79

11.51%

Otter Tail Earnings Call Summary

Earnings Call Date:May 05, 2025

(Q1-2025)

% Change Since: -0.70%|

Next Earnings Date:Aug 04, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a mixed performance for Otter Tail Corporation. While there are significant achievements such as growth in the Electric segment, successful completion of rate cases, and strategic facility expansions, there are also notable challenges including a decline in overall earnings per share, pressures in the Manufacturing and Plastics segments, and broader economic uncertainties.

Q1-2025 Updates

Positive Updates

Electric Segment Earnings Growth

Electric segment earnings increased 10% in Q1, driven by favorable weather conditions, increased sales volumes, and increased rider revenues from ongoing capital investments.

Successful Rate Case Completion

Otter Tail Power successfully completed its North Dakota rate case, implementing base rates in March, which was viewed as constructive and balanced.

BTD Georgia Facility Expansion

Completion of the BTD Georgia facility expansion positions Otter Tail for growth in the Southeast market, expected to increase production capacity up to $35 million in incremental annual sales.

Strong Balance Sheet

Otter Tail maintains a strong balance sheet with 62% consolidated equity layer and over $600 million in available liquidity. No external equity issuances are expected for at least the next five years.

Plastics Segment Volume Increase

Sales volumes in the Plastics segment increased 13% in Q1 due to strong distributor and end market demand and capacity expansion.

Negative Updates

Decline in Overall Earnings Per Share

Diluted earnings per share declined 8% in Q1 compared to the same period last year.

Manufacturing Segment Challenges

Manufacturing segment earnings decreased, with lower sales volumes and increased production costs due to soft end market demand, particularly in recreational vehicles and agricultural equipment.

Plastics Segment Pricing Pressure

Average sales price of PVC pipe declined 11% in Q1 compared to the previous year, continuing the downward trend since mid-2022.

Uncertainty in Macroeconomic Conditions

The business faces heightened uncertainty due to U.S. trade policy and macroeconomic conditions, impacting investment and cost recovery strategies.

Company Guidance

During the Otter Tail Corporation's First Quarter 2025 Earnings Conference Call, the company provided detailed guidance on its financial and operational expectations for the year. The company reported a diluted earnings per share (EPS) of $1.62 for the first quarter, a decline from the previous year but in line with its forecasts. Otter Tail affirmed its 2025 earnings guidance with a midpoint of $5.88 per share, despite facing uncertainties in U.S. trade policy and macroeconomic conditions. The company expects its Electric segment to grow earnings by approximately 7%, while the Manufacturing and Plastics segments are anticipated to see declines due to challenging market conditions. Otter Tail highlighted its strong balance sheet with a 62% consolidated equity layer and over $600 million in available liquidity. The company emphasized its commitment to strategic capital investments, projecting a compounded annual growth rate of 9% in its rate base through 2029. Additionally, Otter Tail plans to finance its growth initiatives without any equity issuances for at least the next five years, reflecting robust cash flow from its diversified business model.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.