Reasons to Add Otter Tail (OTTR) to Your Portfolio Right Now
Otter Tail Corporation (OTTR), given its two-platform business model that consists of Electric and Manufacturing units, provides attractive investment opportunities in the utility space.
Let’s focus on the factors that make this current Zacks Rank #1 (Strong Buy) company a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2023 and 2024 earnings per share is pegged at $6.85 and $4.37, respectively, implying an increase of 16.5% and 7.9% in the last 60 days
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Otter Tail’s trailing four-quarter earnings surprise is 34.9%, 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 21.37%, higher than the industry average of 10.06%.
Currently, the company has a dividend yield of 2% compared with the Zacks S&P 500 Composite’s 1.61%.
Debt Level & Liquidity Ratio
Its total debt-to-capital ratio is 37 compared with the industry average of 54. This indicates that the company is managing its business far more efficiently than its peers in the same space.
Its current ratio at the end of third-quarter 2023 was 1.8. The strong ratio indicates that the company will be able to meet its debt obligations shortly without any difficulties.
Stable Investments
OTTR makes consistent investments to upgrade and maintain its existing infrastructure to provide 24/7 reliable services to its customer base. The company has plans to invest $1.1 billion in the 2023-2027 period to further strengthen its operations.
Nearly 39% of planned expenditures will be utilized for adding renewable and natural gas assets to its portfolio and another 42% will be used for adding as well as upgrading electric transmission and distribution lines. The ongoing investments and planned future spending will assist the company in making its systems clean and providing affordable and reliable services to customers.
Price Performance
In the last six months, the stock has gained 15.8% against the industry’s 5.1% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks in the same sector include OGE Energy OGE, ALLETE ALE and NextEra Energy NEE, each currently holding a Zacks Rank #2 (Buy).
OGE Energy, ALLETE and NextEra Energy delivered an average earnings surprise of 8.3%, 31.6% and 7.3%, respectively, in the last reporting quarter.
The Zacks Consensus Estimate for 2023 earnings for OGE Energy and ALLETE has moved up 17.9% and 0.5% respectively, in the past 60 days. NextEra Energy’s 2023 earnings estimate has moved up 7.59% year over year.
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NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
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