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Otter Tail Corp. (OTTR)
NASDAQ:OTTR

Otter Tail (OTTR) AI Stock Analysis

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Otter Tail

(NASDAQ:OTTR)

Rating:73Outperform
Price Target:
$88.00
â–²(10.43%Upside)
Otter Tail's overall stock score reflects strong financial health and an attractive valuation. While the technical outlook is neutral, the company's earnings call presents both significant growth prospects and challenges, leading to a moderate score.
Positive Factors
Electric segment performance
OTTR's electric segment revenue exceeded expectations, showing strong performance in this area of the business.
PVC pipe margin estimates
There is an increase in PVC pipe margin estimates due to higher margins on larger-diameter PVC pipe sales.
Negative Factors
Debt level concerns
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.
Manufacturing segment challenges
The Manufacturing segment experienced a decline in revenue due to lower demand from key customer sectors.

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 Corporation generates revenue mainly through its Electric and Manufacturing segments. The Electric segment, which is regulated, earns money by providing electric services to customers in Minnesota, North Dakota, and South Dakota. Revenue is primarily derived from selling electricity to residential, commercial, and industrial customers, with rates and services regulated by state and federal authorities. The Manufacturing segment contributes to revenue through the sale of metal fabricated products and manufacturing equipment. Otter Tail's earnings in this segment are influenced by the market demand for these products, which are sold to various industries, including transportation, construction, and agriculture. The company's diversified approach helps mitigate risks associated with reliance on a single revenue stream, and strategic investments in infrastructure and technology further bolster its financial performance.

Otter Tail Earnings Call Summary

Earnings Call Date:May 05, 2025
(Q1-2025)
|
% Change Since: -0.96%|
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.

Otter Tail Financial Statement Overview

Summary
Otter Tail demonstrates strong profitability and operational efficiency with high margins and a balanced capital structure. However, slight revenue and free cash flow growth declines require attention.
Income Statement
78
Positive
Otter Tail exhibits solid profitability with strong gross and net profit margins. The TTM data shows a gross profit margin of approximately 40.3% and a net profit margin of 22.4%, indicating efficient cost management. However, revenue growth has been slightly negative, reflecting a competitive market. EBIT and EBITDA margins remain robust at 28.0% and 36.6% respectively, showcasing operational efficiency.
Balance Sheet
75
Positive
The company's balance sheet reflects moderate leverage with a debt-to-equity ratio of 0.61, indicating a balanced capital structure. The equity ratio stands at 46.4%, demonstrating a stable financial position. Return on equity is strong at 17.2%, suggesting effective use of shareholder funds, although the substantial debt level is a potential risk.
Cash Flow
72
Positive
Cash flow analysis shows a solid operational cash flow to net income ratio of 1.42, indicating good cash generation relative to profits. Free cash flow growth is negative, showing a decrease, which may signal increased capital expenditures or reduced operational cash inflows. However, the free cash flow to net income ratio is healthy at 0.28, suggesting adequate cash flow management.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.32B1.33B1.35B1.46B1.20B890.11M
Gross Profit533.06M583.10M565.15M570.50M424.07M302.01M
EBITDA483.94M515.83M499.12M486.15M341.95M232.54M
Net Income295.42M301.66M294.19M284.18M176.77M95.85M
Balance Sheet
Total Assets3.70B3.65B3.24B2.90B2.75B2.58B
Cash, Cash Equivalents and Short-Term Investments284.81M294.65M230.37M119.00M1.54M1.16M
Total Debt1.05B1.01B905.48M832.02M855.16M845.52M
Total Liabilities1.98B1.98B1.80B1.68B1.76B1.71B
Stockholders Equity1.72B1.67B1.44B1.22B990.78M870.97M
Cash Flow
Free Cash Flow82.00M94.08M117.36M218.18M59.41M-159.63M
Operating Cash Flow420.29M452.73M404.50M389.31M231.24M211.92M
Investing Cash Flow-396.41M-411.37M-289.29M-175.07M-171.51M-375.65M
Financing Cash Flow22.78M22.92M-3.83M-96.78M-59.36M143.69M

Otter Tail Technical Analysis

Technical Analysis Sentiment
Positive
Last Price79.69
Price Trends
50DMA
77.82
Positive
100DMA
78.73
Positive
200DMA
77.74
Positive
Market Momentum
MACD
0.35
Negative
RSI
57.97
Neutral
STOCH
84.70
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 79.69 is above the 20-day moving average (MA) of 77.97, above the 50-day MA of 77.82, and above the 200-day MA of 77.74, indicating a bullish trend. The MACD of 0.35 indicates Negative momentum. The RSI at 57.97 is Neutral, neither overbought nor oversold. The STOCH value of 84.70 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 (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
73
Outperform
$3.34B11.3518.38%2.63%-2.68%-3.73%
AVAVA
72
Outperform
$3.09B16.347.25%5.11%3.14%-2.66%
69
Neutral
$3.29B25.4910.62%2.00%6.03%6.15%
NWNWE
68
Neutral
$3.22B13.658.27%5.03%4.31%19.33%
ALALE
67
Neutral
$3.76B20.356.49%4.51%-11.15%-23.41%
BKBKH
67
Neutral
$4.13B14.538.02%4.75%3.28%-3.49%
67
Neutral
$16.52B17.144.47%3.56%4.76%6.13%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
OTTR
Otter Tail
79.69
-4.13
-4.93%
ALE
Allete
64.86
5.20
8.72%
AVA
Avista
38.36
6.42
20.10%
BKH
Black Hills
56.91
5.83
11.41%
MGEE
MGE Energy
90.05
15.78
21.25%
NWE
Northwestern
52.47
6.05
13.03%

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.

The most recent analyst rating on (OTTR) stock is a Hold with a $81.00 price target. To see the full list of analyst forecasts on Otter Tail stock, see the OTTR Stock Forecast page.

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.

The most recent analyst rating on (OTTR) stock is a Buy with a $83.00 price target. To see the full list of analyst forecasts on Otter Tail stock, see the OTTR Stock Forecast page.

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: Jul 02, 2025