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Otter Tail (OTTR)
:OTTR
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Otter Tail
(NASDAQ:OTTR)
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Rating:71Outperform
Price Target:
$88.00
▲(12.49% Upside)
Otter Tail's overall stock score is driven by its solid financial performance and attractive valuation, which are offset by mixed technical indicators and challenges highlighted in the earnings call. The company's strong cash flow and increased earnings guidance are positive factors, while technical analysis suggests caution due to bearish momentum.
Positive Factors
Regulatory Approvals
Regulatory approvals for solar projects enhance Otter Tail's renewable energy portfolio, aligning with industry trends and ensuring long-term growth in sustainable energy production.
Electric Segment Growth
The projected growth in the Electric segment reflects strategic investments and a focus on infrastructure, ensuring sustained revenue and market position.
Strong Cash Position
A strong cash position provides financial flexibility for strategic investments and operations, supporting long-term stability and growth initiatives.
Negative Factors
Decline in EPS
The decline in EPS indicates potential challenges in profitability, which could affect investor confidence and future earnings potential if not addressed.
Challenges in Manufacturing Segment
Weak demand in the manufacturing segment could hinder revenue diversification efforts, impacting overall financial performance if market conditions don't improve.
Plastics Segment Pricing Decline
A decline in pricing within the Plastics segment suggests margin pressure, which could affect profitability if cost management and demand do not offset the pricing challenges.
Otter Tail (OTTR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.24B
Dividend Yield2.64%
Average Volume (3M)210.04K
Price to Earnings (P/E)11.5
Beta (1Y)0.72
Revenue Growth-3.69%
EPS Growth-8.25%
CountryUS
Employees2,133
SectorIndustrials
Sector Strength72
IndustryDiversified Utilities
Share Statistics
EPS (TTM)1.85
Shares Outstanding41,905,520
10 Day Avg. Volume162,163
30 Day Avg. Volume210,039
Financial Highlights & Ratios
PEG Ratio4.51
Price to Book (P/B)1.85
Price to Sales (P/S)2.32
P/FCF Ratio32.79
Enterprise Value/Market Cap1.23
Enterprise Value/Revenue3.04
Enterprise Value/Gross Profit7.02
Enterprise Value/Ebitda8.04
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusHold
Number of Analyst Covering2
Otter Tail Business Overview & Revenue Model
Company DescriptionOtter Tail Corporation, together with its subsidiaries, engages in electric utility, manufacturing, and plastic pipe businesses in the United States. The company's Electric segment produces, transmits, distributes, and sells electric energy in Minnesota, North Dakota, and South Dakota; and operates as a participant in the Midcontinent Independent System Operator, Inc. markets. This segment generates electricity through coal, wind and hydro, and natural gas. It serves approximately 133,000 residential, industrial, and other commercial customers. Its Manufacturing segment engages in the contract machining, metal parts stamping, fabrication and painting, and production of plastic thermoformed horticultural containers, life science and industrial packaging, and material handling components, and extruded raw material stock for recreational vehicle, agricultural, construction, lawn and garden, and industrial and energy equipment industries. It also manufactures clamshell packing, blister packs, returnable pallets, and handling trays for shipping and storing odd-shaped or difficult-to-handle parts for customers in the horticulture, medical and life sciences, industrial, recreation, and electronics industries. The company's Plastics segment manufactures polyvinyl chloride pipes for municipal water, rural water, wastewater, storm drainage and water reclamation system, and other uses. This segment markets its products to wholesalers and distributors through independent sales representatives, company salespersons, and customer service representatives. The company was formerly known as Otter Tail Power Company and changed its name to Otter Tail Corporation in 2001. Otter Tail Corporation was founded in 1907 and is headquartered in Fergus Falls, Minnesota.
How the Company Makes MoneyOtter Tail generates revenue primarily through its regulated utility operations, which account for a significant portion of its income. The company earns money by charging customers for electricity and natural gas services, with rates regulated by state utility commissions. Additionally, Otter Tail's manufacturing and construction segments contribute to its revenue by providing specialized products and services to various industries. The company has established significant partnerships with local governments and private sector clients for infrastructure projects, enhancing its earnings potential. Overall, Otter Tail's revenue model is anchored in its ability to provide essential services while capitalizing on its diverse business operations.
Otter Tail Earnings Call Summary
Earnings Call Date:Aug 04, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 03, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with notable achievements in regulatory approvals and increased earnings guidance, but also faced challenges with declining earnings and soft market conditions in key segments.Q2-2025 Updates
Positive Updates
Increased 2025 Earnings Guidance
The company increased the midpoint of its 2025 earnings guidance to $6.26 from $5.88 due to better-than-anticipated performance in the Plastics segment.
Regulatory Approvals for Solar Projects
Secured regulatory approval from Minnesota and South Dakota Commissions for two solar projects under development, expected to receive full production tax credits.
Strong Cash Position
Maintained over $300 million in cash on hand, supporting a strong balance sheet and customer-focused growth strategy.
Electric Segment Growth
Projected a 9% compound annual growth rate in earnings per share for the Electric segment from 2024 to 2029, driven by a $1.4 billion capital investment plan.
Negative Updates
Decline in Diluted Earnings Per Share
Produced diluted earnings per share of $1.85 in the second quarter compared to $2.07 the previous year, reflecting a decline in earnings.
Challenges in Manufacturing Segment
Manufacturing segment earnings decreased by $0.08 per share due to soft-end market demand and deleveraging of fixed production costs.
Plastics Segment Pricing Decline
Sales pricing of PVC pipe decreased by 15% in the second quarter compared to the previous year, although offset by an 11% increase in sales volumes.
Company Guidance
During the second quarter 2025 earnings call, Otter Tail Corporation provided updated financial guidance, increasing the midpoint of their 2025 earnings per share (EPS) guidance to $6.26 from $5.88, driven by stronger-than-anticipated performance in the Plastics segment. The company reported diluted EPS of $1.85 for Q2 2025, down from $2.07 the previous year, but still exceeding expectations. The Electric segment saw a $0.02 increase in earnings per share due to favorable weather and higher rider revenues, despite increased operating and maintenance expenses. The Plastics segment experienced a decrease in EPS by $0.18, attributed to a 15% decline in sales prices, although sales volumes rose by 11% due to robust demand and enhanced production capabilities. The company reaffirmed its Electric segment capital investment plan, projecting a 9% compound annual growth rate in earnings per share through 2029, focusing on customer-focused investments totaling $1.4 billion. Additionally, Otter Tail highlighted legislative impacts such as the phase-out of renewable energy credits, and the EPA's reconsideration of environmental regulations, emphasizing their potential to extend coal facility availability.Otter Tail Financial Statement Overview
Summary
Otter Tail's financial performance is solid, with strong profitability and cash flow metrics. Despite a negative revenue growth rate, the company maintains healthy margins and a stable balance sheet. The significant improvement in free cash flow growth is a positive indicator of future financial flexibility.Income Statement
Otter Tail's income statement shows a strong gross profit margin of 43.23% TTM, indicating efficient cost management. However, the company faces challenges with a negative revenue growth rate of -0.70% TTM, reflecting a decline in sales. The net profit margin remains healthy at 21.82% TTM, showcasing profitability despite revenue challenges. EBIT and EBITDA margins are robust at 29.11% and 37.75% TTM, respectively, indicating strong operational efficiency.75
Positive
Balance Sheet
The balance sheet reveals a moderate debt-to-equity ratio of 0.59 TTM, suggesting a balanced approach to leveraging. Return on equity is solid at 16.85% TTM, reflecting effective use of equity capital. The equity ratio stands at 47.13% TTM, indicating a stable financial structure with a significant portion of assets financed by equity.70
Positive
Cash Flow
Cash flow analysis shows a significant improvement in free cash flow growth at 69.45% TTM, highlighting enhanced cash generation capabilities. The operating cash flow to net income ratio is strong at 1.91 TTM, indicating efficient conversion of income to cash. Free cash flow to net income ratio is 0.36 TTM, demonstrating a healthy cash flow position relative to earnings.80
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.31B | 1.33B | 1.35B | 1.46B | 1.20B | 890.11M |
| Gross Profit | 567.01M | 583.10M | 565.15M | 570.50M | 424.07M | 302.01M |
| EBITDA | 495.17M | 515.83M | 499.12M | 486.15M | 341.95M | 232.54M |
| Net Income | 286.16M | 301.66M | 294.19M | 284.18M | 176.77M | 95.85M |
Balance Sheet | ||||||
| Total Assets | 3.77B | 3.65B | 3.24B | 2.90B | 2.75B | 2.58B |
| Cash, Cash Equivalents and Short-Term Investments | 307.24M | 294.65M | 230.37M | 119.00M | 1.54M | 1.16M |
| Total Debt | 1.04B | 1.01B | 905.48M | 832.02M | 855.16M | 845.52M |
| Total Liabilities | 1.99B | 1.98B | 1.80B | 1.68B | 1.76B | 1.71B |
| Stockholders Equity | 1.77B | 1.67B | 1.44B | 1.22B | 990.78M | 870.97M |
Cash Flow | ||||||
| Free Cash Flow | 138.95M | 94.08M | 117.36M | 218.18M | 59.41M | -159.63M |
| Operating Cash Flow | 388.65M | 452.73M | 404.50M | 389.31M | 231.24M | 211.92M |
| Investing Cash Flow | -310.33M | -411.37M | -289.29M | -175.07M | -171.51M | -375.65M |
| Financing Cash Flow | -1.75M | 22.92M | -3.83M | -96.78M | -59.36M | 143.69M |
Otter Tail Technical Analysis
Negative
78.23
Price Trends
81.16
Negative
79.71
Negative
78.86
Negative
Market Momentum
-0.84
Negative
40.74
Neutral
41.68
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OTTR, the sentiment is Negative. The current price of 78.23 is above the 20-day moving average (MA) of 77.78, below the 50-day MA of 81.16, and below the 200-day MA of 78.86, indicating a bearish trend. The MACD of -0.84 indicates Negative momentum. The RSI at 40.74 is Neutral, neither overbought nor oversold. The STOCH value of 41.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OTTR.
Otter Tail Risk Analysis
Otter Tail disclosed 36 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
| ― | $4.63B | 16.48 | 8.13% | 4.20% | 5.41% | -1.89% | |
| ― | $3.67B | 16.70 | 7.93% | 4.40% | 3.78% | 7.48% | |
| ― | $3.24B | 11.48 | 17.13% | 2.64% | -3.69% | -8.25% | |
| ― | $3.03B | 23.69 | 10.75% | 2.20% | 8.47% | 12.76% | |
| ― | $3.10B | 17.42 | 6.91% | 5.08% | 2.41% | -9.85% | |
| ― | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
| ― | $3.91B | 21.29 | 6.46% | 4.29% | -0.44% | -17.46% |
* Industrials Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.