Maxim Group analyst Tate Sullivan has maintained their neutral stance on OTTR stock, giving a Hold rating yesterday.
Tate Sullivan has given his Hold rating due to a combination of factors, including Otter Tail’s first-quarter performance and outlook for the coming years. While Otter Tail reported lower than anticipated first-quarter revenue, it saw higher earnings per share (EPS) because of prolonged higher margins in its Plastics segment, which is centered on the production of PVC pipes. Even though the company has raised its EPS guidance for 2024, it still forecasts a year-over-year decline, which Sullivan attributes to expected lower margins in both the Plastics and Electric segments. Despite the upward adjustment in EPS guidance, the anticipation of declining EPS in 2024 and 2025 likely influenced the Hold rating.
Sullivan’s analysis also indicates that Otter Tail’s stock trades at a fair valuation, with a price-to-earnings (P/E) multiple of 14.1 times his 2024 EPS estimate. This suggests that the current stock price adequately reflects the company’s earnings potential. Furthermore, the report suggests that Otter Tail will finance its capital expenditures and dividend growth through cash generated from operations in 2024, but will likely resort to additional debt in 2025. This financial strategy, along with the forecasted decline in EPS and the fair valuation of the stock, underpins Sullivan’s decision to maintain a Hold rating on Otter Tail’s stock.
According to TipRanks, Sullivan is a 5-star analyst with an average return of 13.0% and a 48.10% success rate. Sullivan covers the Industrials sector, focusing on stocks such as BWX Technologies, Euroseas, and Seanergy Maritime.
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Otter Tail (OTTR) Company Description:
Otter Tail Corp. is a holding company, which engages in the energy, infrastructure, and production businesses. It operates through the following segments: Electric, Manufacturing, and Plastics. The Electric segment generates, transmits, and distributes power and electric energy. The Manufacturing segment offers contract machining, metal parts stamping, fabrication, handling trays, and horticultural containers. The Plastics segment produces polyvinyl chloride pipes. The company was founded in 1907 and is headquartered in Fergus Falls, MN.
