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Otter Tail (OTTR)
:OTTR
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Otter Tail
(NASDAQ:OTTR)
73Outperform
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
$3.34B
Dividend Yield2.42%
Average Volume (3M)233.29K
Price to Earnings (P/E)11.4
Beta (1Y)0.63
Revenue Growth-2.68%
EPS Growth-3.73%
CountryUS
Employees2,133
SectorUtilities
Sector Strength80
IndustryDiversified Utilities
Share Statistics
EPS (TTM)1.62
Shares Outstanding41,904,370
10 Day Avg. Volume237,628
30 Day Avg. Volume233,295
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
$83.00Price Target Upside5.00% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
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 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
Positive
79.05
Price Trends
78.97
Positive
78.06
Positive
78.65
Positive
Market Momentum
0.09
Negative
52.88
Neutral
85.45
Negative
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 79.05 is above the 20-day moving average (MA) of 78.10, above the 50-day MA of 78.97, and above the 200-day MA of 78.65, indicating a bullish trend. The MACD of 0.09 indicates Negative momentum. The RSI at 52.88 is Neutral, neither overbought nor oversold. The STOCH value of 85.45 is Negative, 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 |
|---|---|---|---|---|---|---|---|
75 Outperform | $3.42B | 26.47 | 10.62% | 1.90% | 6.03% | 6.15% | |
73 Outperform | $3.34B | 11.36 | 18.38% | 2.42% | -2.68% | -3.73% | |
70 Outperform | $4.27B | 15.05 | 8.02% | 4.46% | 3.28% | -3.49% | |
68 Neutral | $3.47B | 14.59 | 7.94% | 4.62% | 4.31% | 19.33% | |
67 Neutral | $3.78B | 20.44 | 6.49% | 4.37% | -11.15% | -23.41% | |
67 Neutral | $3.15B | 16.59 | 7.25% | 4.89% | 3.14% | -2.66% | |
63 Neutral | $8.57B | 10.13 | 4.66% | 4.38% | 3.79% | -12.91% |
* Utilities Sector Average
Performance Comparison
OTTR
Otter Tail
79.05
-10.79
-12.01%
ALE
Allete
65.23
4.47
7.36%
AVA
Avista
39.21
3.22
8.95%
BKH
Black Hills
59.29
5.02
9.25%
MGEE
MGE Energy
92.10
11.45
14.20%
NWE
Northwestern
56.31
6.03
11.99%
Otter Tail Earnings Call Summary
Earnings Call Date:May 05, 2025
(Q1-2025)
| % Change Since: -1.75%|
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.