Otter Tail Corporation (OTTR, Financial) reported first-quarter revenue of $337.4 million, which fell short of the expected $349.7 million from analysts. Despite this, the company managed earnings of $68.1 million, or $1.62 per diluted share, aligning with its projections. The leadership expressed satisfaction with these results, noting the company's adaptability to market changes and commitment to its strategic goals.
During the quarter, Otter Tail Power successfully concluded its North Dakota general rate case, implementing new base rates. The company described this outcome as positive, aligning with its regulatory and investment objectives. Efforts are also ongoing in developing renewable energy and major transmission projects.
Additionally, Otter Tail secured an agreement to supply electricity to a new large customer located near its Big Stone Plant. Regulatory approval is currently being sought for this new service. The company remains confident in managing the present economic challenges, bolstered by its strong financial position and experienced leadership team.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 1 analysts, the average target price for Otter Tail Corp (OTTR, Financial) is $82.00 with a high estimate of $82.00 and a low estimate of $82.00. The average target implies an upside of 1.22% from the current price of $81.01. More detailed estimate data can be found on the Otter Tail Corp (OTTR) Forecast page.
Based on the consensus recommendation from 3 brokerage firms, Otter Tail Corp's (OTTR, Financial) average brokerage recommendation is currently 3.0, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Otter Tail Corp (OTTR, Financial) in one year is $75.85, suggesting a downside of 6.37% from the current price of $81.01. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Otter Tail Corp (OTTR) Summary page.
OTTR Key Business Developments
Release Date: February 18, 2025
- Diluted Earnings Per Share (EPS): $7.17 for 2024, compared to $7 in 2023.
- Return on Equity: 19% on an equity layer of 62%.
- Electric Segment Earnings Growth: Nearly 8% year-over-year, with an increase of $0.15 per share.
- Plastics Segment Earnings Per Share: $4.77, with a $0.30 increase from 2023.
- Manufacturing Segment Sales Volume Decrease: 15% from 2023 levels.
- Plastics Segment Sales Volume Increase: 27% in 2024.
- Dividend Increase: 12% increase, resulting in an annual indicated dividend for 2025 of $2.10 per share.
- 2025 EPS Guidance Range: $5.68 to $6.08.
- Capital Spending Plan: $1.4 billion for Otter Tail Power, a 9% increase over the previous plan.
- Rate Base Growth: Compounded annual growth rate of 9% expected.
- Net Annual Revenue Requirement Increase: $13.1 million from North Dakota general rate case.
- Available Liquidity: $606 million as of December 31, 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Otter Tail Corp (OTTR, Financial) achieved record earnings in 2024 with a diluted earnings per share of $7.17.
- The company updated its 5-year capital spending plan, increasing Otter Tail Power's portion to $1.4 billion, a 9% increase over the previous plan.
- Otter Tail Power continues to maintain some of the lowest electric rates in the nation, with 2024 rates 30% below the national average.
- The company announced plans to add up to 345 megawatts of solar generation, representing a significant investment opportunity.
- Otter Tail Corp (OTTR) increased its long-term earnings per share growth rate target to 6% to 8%, up from the previous 5% to 7%.
Negative Points
- The manufacturing and plastics segments faced dynamic market conditions in 2024, with challenges expected to continue into 2025.
- Sales prices of PVC pipe have steadily declined since mid-2022, decreasing 12% in 2024 compared to 2023 levels.
- Manufacturing segment earnings decreased due to lower sales volumes, higher production costs, and less scrap revenue.
- The company anticipates a decline in plastics segment earnings through 2027, with normalization expected by 2028.
- End market conditions for the manufacturing segment remain challenging, impacted by higher dealer and used inventory levels, inflationary pressures, and increased interest rates.
