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4 Reasons to Add Otter Tail (OTTR) to Your Portfolio Now

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Zacks Equity Research
·3 min read
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Otter Tail Corporation’s OTTR steady capital investments are strengthening its existing infrastructure and two-platform business model is enhancing shareholder value through its high-performing, low-cost electric utility, as well as disciplined manufacturing companies.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Growth Projections & Surprise History

The Zacks Consensus Estimate for 2020 earnings per share and revenues is pegged at $2.26 and $884.6 million, respectively. The bottom-line estimate suggests an increase of 4.15% from the year-ago level.

The consensus mark for 2021 earnings and revenues is pegged at $2.47 per share and $957.3 million, respectively. The bottom- and top-line estimates suggest a 9.29% and 8.22% increase, respectively, from the year-ago level.

Otter Tail’s trailing four-quarter earnings surprise is 9.93%, on average.

Return on Equity & Dividend Yield

Return on Equity (ROE) indicates how efficiently a company is utilizing shareholders’ funds to generate returns. At present, its ROE is 11.98%, higher than the industry average of 9.24%.

Currently, the company has a dividend yield of 3.59% compared with the industry’s 3.35%.

Debt to Capital Ratio

The company’s total debt to capital ratio is 48.83 compared with the industry average of 57.14. This indicates that the company is managing the business far more efficiently than peers in the same space.

Its times interest earned ratio at the end of third-quarter 2020 was 4.6, up from the fourth-quarter 2019 level of 4.3. The strong ratio indicates that the company will be able to meet debt obligations in the near future without any difficulties.

Regular Investments

Otter Tail makes consistent investments to upgrade and maintain the existing infrastructure for providing 24x7 reliable services to the customer base. The company has plans to invest $898 million in the 2020-2024 time period. Nearly 32% of the planned expenditure will be utilized for renewable resource additions to its portfolio, and 34% will be utilized for adding and upgrading its transmission and distribution lines. The ongoing investments and planned future spending will assist the company to make its systems clean and services affordable as well as reliable, along with develop innovative programs to assist customers.

Price Performance

In the past month, the stock has gained 2.9% compared with the industry’s rally of 0.6%.

Other Stocks to Consider

Other top-ranked stocks in the same space include PNM Resources PNM, Portland General Electric Company POR and Pinnacle West Capital PNW, each currently holding a Zacks Rank #2.

PNM Resources, Portland General Electric and Pinnacle West Capital delivered an average earnings surprise of 9.3%, 98.1% and 27.15% in the last four quarters, respectively.

The Zacks Consensus Estimate for 2020 earnings for PNM Resources, Portland General Electric, and Pinnacle West Capital has moved up 2.7%, 1.8%, and 7.5%, respectively, in the past 60 days.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Pinnacle West Capital Corporation (PNW) : Free Stock Analysis Report
 
Portland General Electric Company (POR) : Free Stock Analysis Report
 
Otter Tail Corporation (OTTR) : Free Stock Analysis Report
 
PNM Resources, Inc. (PNM) : Free Stock Analysis Report
 
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Zacks Investment Research