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Otter Tail Corp. (OTTR)
NASDAQ:OTTR
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Otter Tail
(NASDAQ:OTTR)
73Outperform
Positive Factors
Electric Segment Performance
The Electric segment's revenue exceeded estimates, showing growth despite wider corporate expenses.
Plastics Segment Margins
Higher Plastics segment margin led to 3Q24 EPS of $2.03, above forecast and consensus.
Negative Factors
Earnings Expectations
The 4Q24 results were below expectations, leading to a reduction in estimates for the company.
EPS Guidance
The company's EPS guidance for 2025 is significantly lower than previous forecasts.
Manufacturing Segment Revenue
The Manufacturing segment experienced a decline in revenue due to lower demand from key customer sectors.
Otter Tail (OTTR) vs. S&P 500 (SPY)
Market Cap
$3.38B
Dividend Yield2.39%
Average Volume (3M)283.91K
Price to Earnings (P/E)11.3
Beta (1Y)0.67
Revenue Growth-1.38%
EPS Growth2.28%
CountryUS
Employees2,133
SectorUtilities
Sector Strength93
IndustryDiversified Utilities
Share Statistics
EPS (TTM)7.17
Shares Outstanding41,828,000
10 Day Avg. Volume334,900
30 Day Avg. Volume283,908
Financial Highlights & Ratios
PEG Ratio4.95
Price to Book (P/B)N/A
Price to Sales (P/S)2.54
Price to Cash Flow (P/CF)6.50
P/FCF Ratio6.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$81.00Price Target Upside5.51% Upside
Rating ConsensusHold
Number of Analyst Covering1
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
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.72
Positive
Balance Sheet
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.68
Positive
Cash Flow
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.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| 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
Negative
76.77
Price Trends
79.99
Positive
78.57
Positive
80.83
Negative
Market Momentum
0.20
Positive
52.48
Neutral
30.15
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 76.77 is below the 20-day moving average (MA) of 81.57, below the 50-day MA of 79.99, and below the 200-day MA of 80.83, indicating a neutral trend. The MACD of 0.20 indicates Positive momentum. The RSI at 52.48 is Neutral, neither overbought nor oversold. The STOCH value of 30.15 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 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 (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $6.47B | 21.78 | 9.27% | 2.82% | 3.48% | 6.67% | |
74 Outperform | $4.85B | 14.75 | 8.80% | 4.51% | 15.67% | 29.07% | |
73 Outperform | $3.78B | 21.05 | 6.34% | 4.36% | -18.62% | -27.88% | |
73 Outperform | $3.38B | 11.26 | 19.39% | 2.39% | -1.38% | 2.28% | |
68 Neutral | $3.56B | 15.91 | 7.94% | 4.49% | 6.45% | 13.95% | |
65 Neutral | $12.17B | 16.15 | 5.32% | 4.37% | 5.50% | -9.06% | |
54 Neutral | $1.79B | ― | -68.17% | ― | -4.21% | -760.85% |
* Utilities Sector Average
Performance Comparison
OTTR
Otter Tail
76.77
-7.43
-8.82%
ALE
Allete
65.24
8.50
14.98%
HE
Hawaiian Electric
9.97
-0.94
-8.62%
IDA
IdaCorp
114.40
26.06
29.50%
NWE
Northwestern
56.33
8.85
18.64%
POR
Portland GE
42.70
3.17
8.02%
Otter Tail Earnings Call Summary
Earnings Call Date: Feb 17, 2025 | % Change Since: -1.02% | Next Earnings Date: May 5, 2025
Earnings Call Sentiment Positive
Otter Tail Corporation had a successful year with record earnings, increased long-term financial targets, and significant investments in solar and wind projects. However, challenges persist in the manufacturing segment due to market conditions and declining PVC pipe prices. Despite these challenges, the company's strong financial position and strategic growth initiatives position it well for future success.Highlights
Record Earnings for 2024
Otter Tail Corporation generated record earnings with diluted earnings per share of $7.17, marking a successful year for the company.
Increased Long-Term Financial Targets
The company updated its long-term earnings per share growth rate to 6% to 8%, an increase from the previous 5% to 7%.
Approval of North Dakota General Rate Case
Received approval for a net annual revenue requirement increase of $13.1 million, based on a return on equity of 10.1%.
Significant Solar and Wind Projects
Plans to add up to 345 megawatts of solar generation with an investment opportunity of $500 million; ongoing wind repowering project expected to lower customer bills.
Strong Liquidity and Dividend Increase
Total available liquidity was $606 million, and the company announced a 12% increase in its dividend for 2025, reflecting strong financial health.
Electric Segment Earnings Growth
Electric segment earnings grew nearly 8% year over year, driven by regulatory rate increases and higher sales volumes.
Lowlights
Challenges in Manufacturing Segment
Manufacturing and plastics segments faced dynamic market conditions, with a decrease in manufacturing segment earnings by $0.18 per share due to lower sales volumes and higher production costs.
Decline in PVC Pipe Pricing
Sales prices of PVC pipe declined by 12% in 2024 compared to 2023, affecting the plastics segment performance.
Challenging Market Conditions for 2025
End-market conditions for the manufacturing segment are expected to remain challenging in 2025 due to higher dealer and inventory levels, inflationary pressures, and increased interest rates.
Company Guidance
During the fourth quarter 2024 earnings call, Otter Tail Corporation provided guidance on several key metrics. The company announced a record diluted earnings per share (EPS) of $7.17 for 2024 and increased its long-term EPS growth target from 5%-7% to 6%-8%. Otter Tail Power's five-year capital spending plan was updated to $1.4 billion, a 9% increase, with a projected rate-based compounded annual growth rate (CAGR) of 9%. Additionally, the company initiated its 2025 EPS guidance at $5.68 to $6.08, with an expected return on equity near 14%. The electric segment is projected to grow earnings by approximately 7%, while plastics segment earnings are anticipated to normalize to $45 million-$50 million by 2028. The updated five-year capital plan includes substantial investments in solar and transmission projects, with no equity issuance required for at least five years.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.