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Otter Tail Corp. (OTTR)
NASDAQ:OTTR
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Otter Tail (OTTR) AI Stock Analysis

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OTTR

Otter Tail

(NASDAQ:OTTR)

Rating:79Outperform
Price Target:
$95.00
â–²(13.26% 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
Revenue Performance
Higher electric utility revenue and polyvinyl chloride (PVC) housing pipe margins led to a smaller than expected decline in revenue and EPS.
Segment Performance
OTTR's electric segment revenue exceeded expectations, showing strong performance in this area of the business.
Negative Factors
Future Earnings Forecast
Despite increased estimates, a forecast for EPS declines in 2025 and 2026 remains.
Manufacturing Segment Challenges
The manufacturing segment faced a negative impact from tariffs due to an increase in U.S. steel prices.
Overall Financial Outlook
Revenue in two out of three of OTTR's business segments was lower than expected, contributing to a less favorable overall financial outlook.

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

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
75
Positive
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
70
Positive
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
80
Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.31B1.33B1.35B1.46B1.20B890.11M
Gross Profit567.01M583.10M565.15M570.50M424.07M302.01M
EBITDA495.17M515.83M499.12M486.15M341.95M232.54M
Net Income286.16M301.66M294.19M284.18M176.77M95.85M
Balance Sheet
Total Assets3.77B3.65B3.24B2.90B2.75B2.58B
Cash, Cash Equivalents and Short-Term Investments307.24M294.65M230.37M119.00M1.54M1.16M
Total Debt1.04B1.01B905.48M832.02M855.16M845.52M
Total Liabilities1.99B1.98B1.80B1.68B1.76B1.71B
Stockholders Equity1.77B1.67B1.44B1.22B990.78M870.97M
Cash Flow
Free Cash Flow138.95M94.08M117.36M218.18M59.41M-159.63M
Operating Cash Flow388.65M452.73M404.50M389.31M231.24M211.92M
Investing Cash Flow-310.33M-411.37M-289.29M-175.07M-171.51M-375.65M
Financing Cash Flow-1.75M22.92M-3.83M-96.78M-59.36M143.69M

Otter Tail Technical Analysis

Technical Analysis Sentiment
Positive
Last Price83.88
Price Trends
50DMA
79.79
Positive
100DMA
78.54
Positive
200DMA
77.96
Positive
Market Momentum
MACD
1.45
Positive
RSI
60.47
Neutral
STOCH
33.43
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 83.88 is above the 20-day moving average (MA) of 83.00, above the 50-day MA of 79.79, and above the 200-day MA of 77.96, indicating a bullish trend. The MACD of 1.45 indicates Positive momentum. The RSI at 60.47 is Neutral, neither overbought nor oversold. The STOCH value of 33.43 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 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

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$3.54B12.3217.13%2.42%-3.69%-8.25%
77
Outperform
$4.34B15.028.13%4.49%5.41%-1.89%
77
Outperform
$3.54B15.577.93%4.52%3.78%7.48%
74
Outperform
$3.11B23.4710.75%2.15%8.47%12.76%
72
Outperform
$2.97B16.336.91%5.28%2.41%-9.85%
64
Neutral
$10.73B15.747.56%2.01%2.76%-15.10%
62
Neutral
$3.70B20.126.46%4.54%-0.44%-17.46%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
OTTR
Otter Tail
83.88
8.04
10.60%
ALE
Allete
63.65
2.65
4.34%
AVA
Avista
36.87
0.49
1.35%
BKH
Black Hills
59.69
2.67
4.68%
MGEE
MGE Energy
84.75
-0.23
-0.27%
NWE
Northwestern
57.95
6.02
11.59%

Otter Tail Corporate Events

Private Placements and Financing
Otter Tail Issues $50 Million in Senior Notes
Neutral
Jun 6, 2025

On March 27, 2025, Otter Tail Power Company entered into a Note Purchase Agreement to issue $100 million in senior unsecured notes, with the Series 2025B Notes being issued on June 5, 2025, for $50 million. The proceeds will be used for capital expenditures, refinancing, and general corporate purposes, while the agreement imposes various financial and operational restrictions on OTP.

Business Operations and StrategyRegulatory Filings and Compliance
Otter Tail Seeks 12.5% Revenue Increase in South Dakota
Neutral
Jun 5, 2025

On June 4, 2025, Otter Tail Power Company, a subsidiary of Otter Tail Corporation, filed a request with the South Dakota Public Utilities Commission for a 12.5% increase in annual revenue, amounting to $5.7 million. This request includes changes in the cost and investment recovery mechanism, shifting from riders to base rates, with the proposed rate change to be effective upon the commission’s final decision or 180 days from the filing date, subject to potential refunds.

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.Date of analysis: Aug 19, 2025