Download PDF

1. Company Snapshot

1.a. 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.

Show Full description

1.b. Last Insights on OTTR

Otter Tail Corporation's recent performance was driven by strong Q3 2025 earnings, with diluted EPS of $1.86 and revenue growth. The company increased its 2025 earnings guidance to $6.47 and upgraded its long-term EPS growth rate target to 7-9%. Institutional investors, including Ethic Inc. and D.A. Davidson & CO., have shown confidence in the stock, with increased holdings. A rate increase request by Otter Tail Power Company may also contribute to future growth. The company's electric utility's five-year rate base CAGR was updated to 10%.

1.c. Company Highlights

2. Otter Tail Corporation's 2025 Earnings: A Mixed Bag

Otter Tail Corporation reported 2025 diluted earnings per share of $6.55, a 9% decrease from the previous year, but towards the upper end of their earnings guidance range. The actual EPS beat analyst estimates, with a reported EPS of $1.23 relative to estimates at $1.16. The decrease was driven by lower earnings in the Plastics segment, partially offset by increased earnings in the Electric segment. The Electric segment earnings increased 7% year-over-year, driven by rate base investments, higher residential and commercial sales volumes, and lower operating and maintenance expenses.

Publication Date: Feb -22

📋 Highlights
  • 2025 Earnings Decline: Diluted EPS fell to $6.55 (-9 YoY), yet met the upper end of guidance, reflecting Electric segment growth (7% YoY) offsetting Plastics losses.
  • 2026 Earnings Guidance: New range of $5.22–$5.62, midpoint $5.42, anticipates Electric segment 14% earnings growth from rate base expansion (wind/solar investments).
  • Segment Performance Outlook: Manufacturing segment projects 7% earnings rise, while Plastics faces 36% decline due to PVC price drops.
  • Capital Spending Plan: $1.9B five-year investment targets 10% CAGR in rate base, funding growth without external equity until 2030.
  • Dividend Growth & Returns: 10% dividend hike in 2025 (second consecutive year), with long-term goals of 7–9% EPS growth and 10–12% total shareholder return by 2028.

Segment Performance

The company's Electric segment is a bright spot, with earnings increasing 7% year-over-year. The Manufacturing segment is also expected to see a 7% earnings increase in 2026, driven by improved sales outlook and productivity. However, the Plastics segment is expected to decline 36% in 2026, due to declining average PVC pipe prices. As management noted, "We expect our electric segment to produce an accretive return and incremental cash to fund our utility's rate base growth plan."

Outlook and Guidance

The company is initiating a 2026 diluted earnings per share guidance range of $5.22 to $5.62, with a midpoint of $5.42. Analysts estimate next year's revenue growth at 3.1%. Otter Tail Power's five-year capital spending plan totals $1.9 billion, with a 10% rate base compound annual growth rate. The company has no external equity needs through at least 2030 and plans to issue debt at Otter Tail Power to fund the investment plan.

Valuation and Dividend

With a P/E Ratio of 12.89 and a Dividend Yield of 2.53%, Otter Tail Corporation appears to be reasonably valued. The company's ROE of 15.36% and ROIC of 7.88% indicate a strong ability to generate returns on equity and invested capital. Otter Tail Corporation increased its dividend by 10% in 2025, marking the second consecutive year of double-digit dividend increases, and has paid dividends for 88 consecutive years without interruption or reduction.

3. NewsRoom

Card image cap

Dynamic Technology Lab Private Ltd Acquires Shares of 13,601 Otter Tail Corporation $OTTR

Mar -09

Source: defenseworld.net

Card image cap

Otter Tail Q4 Earnings Call Highlights

Feb -19

Source: defenseworld.net

Card image cap

Otter Tail: Cyclical Pain, Long-Term Gain (Upgrade)

Feb -18

Source: seekingalpha.com

Card image cap

Otter Tail: Solid Q4 Results And Strengthened Growth Prospects (Rating Upgrade)

Feb -18

Source: seekingalpha.com

Card image cap

Otter Tail Corporation (OTTR) Q4 2025 Earnings Call Transcript

Feb -17

Source: seekingalpha.com

Card image cap

Otter Tail Corporation Announces Annual Earnings and Initiates 2026 Earnings Guidance

Feb -16

Source: businesswire.com

Card image cap

Federated Hermes Inc. Has $13.21 Million Stock Holdings in Otter Tail Corporation $OTTR

Feb -01

Source: defenseworld.net

Card image cap

Otter Tail Corporation Will Host Conference Call on 2025 Financial Results

Jan -27

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.39%)

6. Segments

Electric

Expected Growth: 4.0%

Otter Tail Corporation's Electric segment growth is driven by increasing demand for renewable energy, grid modernization, and infrastructure upgrades. Additionally, the company's focus on transmission and distribution investments, as well as its efforts to improve operational efficiency, contribute to the 4.0% growth rate.

Plastics

Expected Growth: 2.5%

Otter Tail Corporation's Plastics segment growth of 2.5% is driven by increasing demand for packaging materials, growth in e-commerce, and rising adoption of sustainable packaging solutions. Additionally, the company's focus on product innovation, operational efficiency, and strategic acquisitions also contribute to the segment's growth.

Manufacturing

Expected Growth: 3.5%

Otter Tail Corporation's 3.5% growth in manufacturing is driven by increasing demand for electrical infrastructure, renewable energy solutions, and industrial automation. Additionally, strategic acquisitions, operational efficiencies, and a strong backlog of projects contribute to the segment's growth. Furthermore, investments in research and development, and a focus on innovation, enable the company to capitalize on emerging trends and opportunities.

7. Detailed Products

Electricity

Generation, transmission, and distribution of electricity to residential, commercial, and industrial customers

Manufactured Products

Design, manufacture, and sale of metal parts and assemblies for the recreational vehicle, automotive, and industrial markets

Plastics

Manufacture and sale of custom-molded plastic components for the industrial, recreational vehicle, and automotive markets

Construction Services

Electrical and mechanical contracting services for commercial, industrial, and municipal customers

Wastewater Treatment

Design, manufacture, and sale of wastewater treatment systems for municipal and industrial customers

8. Otter Tail Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Otter Tail Corporation is moderate, as there are some alternatives available to customers, but they are not highly attractive.

Bargaining Power Of Customers

The bargaining power of customers is low, as Otter Tail Corporation operates in a niche market with limited customer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate, as Otter Tail Corporation relies on a few key suppliers, but has some flexibility in its supply chain.

Threat Of New Entrants

The threat of new entrants is low, as Otter Tail Corporation operates in a highly regulated industry with significant barriers to entry.

Intensity Of Rivalry

The intensity of rivalry is high, as Otter Tail Corporation operates in a competitive industry with several established players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 38.56%
Debt Cost 5.14%
Equity Weight 61.44%
Equity Cost 6.71%
WACC 6.11%
Leverage 62.75%

11. Quality Control: Otter Tail Corporation passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Avista

A-Score: 6.9/10

Value: 7.1

Growth: 4.2

Quality: 4.6

Yield: 8.0

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
NorthWestern

A-Score: 6.8/10

Value: 6.3

Growth: 3.3

Quality: 5.3

Yield: 8.0

Momentum: 8.5

Volatility: 9.7

1-Year Total Return ->

View Full Report
Stock-Card
Otter Tail

A-Score: 6.7/10

Value: 5.1

Growth: 7.0

Quality: 6.5

Yield: 6.0

Momentum: 7.0

Volatility: 8.7

1-Year Total Return ->

View Full Report
Stock-Card
Black Hills

A-Score: 6.7/10

Value: 5.3

Growth: 4.2

Quality: 4.4

Yield: 8.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
ALLETE

A-Score: 6.5/10

Value: 5.7

Growth: 3.9

Quality: 4.4

Yield: 8.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
AES

A-Score: 6.0/10

Value: 7.2

Growth: 5.4

Quality: 3.8

Yield: 8.0

Momentum: 7.0

Volatility: 4.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

87.93$

Current Price

87.93$

Potential

-0.00%

Expected Cash-Flows