Otter Tail (OTTR) AI Stock Analysis

• Market Cap: $3.46B
• Dividend Yield: 2.48%
• Average Volume (3M): 194.59K
• Price to Earnings (P/E): 12.1
• Beta (1Y): 0.71
• Revenue Growth: -3.69%
• EPS Growth: -8.25%
• Country: US
• Employees: 2,133
• Sector: Industrials
• Sector Strength: 72
• Industry: Diversified Utilities
• EPS (TTM): 1.85
• Shares Outstanding: 41,905,520
• 10 Day Avg. Volume: 285,834
• 30 Day Avg. Volume: 194,586
• PEG Ratio: 4.51
• Price to Book (P/B): 1.85
• Price to Sales (P/S): 2.32
• P/FCF Ratio: 32.79
• Enterprise Value/Market Cap: 1.15
• Enterprise Value/Revenue: 3.04
• Enterprise Value/Gross Profit: 7.02
• Enterprise Value/Ebitda: 8.04
• 1Y Price Target: $95.00
• Price Target Upside: 15.25% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 79 Outperform
• Price Target: $95.00 ▲(15.25% Upside)

Otter Tail's overall stock score reflects strong financial performance and attractive valuation, supported by positive technical indicators. The increased earnings guidance and regulatory approvals from the earnings call add to the positive outlook, despite some challenges in specific segments.

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 Business Overview & Revenue Model

Company Description

Otter 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 Money

Otter 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 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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 82.43
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 82.43 is below the 20-day moving average (MA) of 83.34, above the 50-day MA of 81.49, and above the 200-day MA of 78.33, indicating a neutral trend. The MACD of 0.18 indicates Positive momentum. The RSI at 47.62 is Neutral, neither overbought nor oversold. The STOCH value of 13.50 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OTTR.

Otter Tail Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
OTTR	79 Outperform	$3.46B	12.13	17.13%	2.48%	-3.69%	-8.25%
BKH	77 Outperform	4.42B	15.13	7.82%	4.40%	5.41%	-1.89%
NWE	77 Outperform	3.56B	15.56	7.83%	4.53%	3.78%	7.48%
AVA	72 Outperform	3.05B	16.62	―	5.17%	2.41%	-9.85%
MGEE	66 Neutral	3.04B	23.06	10.32%	2.19%	8.47%	12.76%
ALE	62 Neutral	3.85B	20.74	6.42%	4.37%	-0.44%	-17.46%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%