June 6, 2024
Top 10 Stock Otter Tail Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Otter Tail – Top 10 Stock in Nasdaq Composite Index
Otter Tail is listed as a top 10 stock on June 06, 2024 in the market index NASDAQ because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 61 (high 61% performer), Obermatt assesses an overall buy recommendation for Otter Tail on June 06, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Electric Utilities |
| Index | Low Emissions, NASDAQ |
| Size class | Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Otter Tail Buy
| 360 METRICS | June 6, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 17 |
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| GROWTH | ||||||||
| GROWTH | 25 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| SENTIMENT | ||||||||
| SENTIMENT | 77 |
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| 360° VIEW | ||||||||
| 360° VIEW | 61 |
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ANALYSIS: With an Obermatt 360° View of 61 (better than 61% compared with alternatives), overall professional sentiment and financial characteristics for the stock Otter Tail are above average. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for Otter Tail. The consolidated Sentiment Rank has a good rank of 77, which means that professional investors are more optimistic about the stock than for 77% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 100 or better than 100% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 17, meaning that the share price of Otter Tail is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 25. ...read more
RECOMMENDATION: With a consolidated 360° View of 61, Otter Tail is better positioned than 61% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 77) and safe financing practices (Safety Rank of 100), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of Otter Taiḷ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for Otter Tail very positive
ANALYSIS: With an Obermatt Sentiment Rank of 77 (better than 77% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Otter Tail is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Otter Tail. Analyst Opinions are at a rank of 2 (worse than 98% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 100, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Otter Tail. Even better, the Professional Investors rank is 94, meaning that professional investors hold more stock in this company than in 94% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 54, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 54% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 77 (more positive than 77% compared with investment alternatives), Otter Tail has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Otter Tail Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 17 (worse than 83% compared with alternatives), Otter Tail shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Otter Tail. Only Price-to-Profit (also referred to as price-earnings, P/E) indicates good stock value with a rank of 52, which means that the stock price compared with what market professionals expect for future profits is lower than for 52% of comparable companies, indicating a good value concerning Otter Tail's profit levels. But Price-to-Sales is 30 which means that the stock price compared with what market professionals expect for future profits is higher than for 70% of comparable companies, indicating a low value concerning Otter Tail's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 18 and for dividend yield, which is lower than for 89% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 17, is a sell recommendation based on Otter Tail's stock price compared with the company's operational size and dividend yields. Can we rely on only one good value indicator? Only if we know the company well. In this case, a high Price-to-Profit Rank, while Price-to-Sales and Price-to-Book are both below the market typical levels, means that the company can charge higher prices for its products and needs less capital to produce them. If this is sustainable, then Otter Tail is a good investment because profits count most in enterprise valuations. The low dividend yield indicates that the company is confident it can do something with the generated cash that is more valuable than paying the profits out to the shareholders in the form of dividends. ...read more
Growth Strategy: Otter Tail Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 25 (better than 25% compared with alternatives), Otter Tail shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Otter Tail. Sales Growth has a rank of 57 which means that currently professionals expect the company to grow more than 57% of its competitors. Stock Returns are also above average with a rank of 87. But Capital Growth has only a rank of 16, which means that currently professionals expect the company to grow its invested capital less than 84% of its competitors. Profit Growth is also low, with a rank of only 11, which means that, currently, professionals expect the company to grow its profits below average. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 25, is a hold recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 87% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. ...read more
Safety Strategy: Otter Tail Debt Financing Safety very solid
| SAFETY METRICS | June 6, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 98 |
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| REFINANCING | ||||||||
| REFINANCING | 99 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 99 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 100 |
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ANALYSIS: With an Obermatt Safety Rank of 100 (better than 100% compared with alternatives) for 2024, the company Otter Tail has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Otter Tail is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Otter Tail. Leverage is at 98, meaning the company has a below-average debt-to-equity ratio. It has less debt than 98% of its competitors. Refinancing is at a rank of 99, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 99% of its competitors. Finally, Liquidity is also good at a rank of 99, which means that the company generates more profit to service its debt than 99% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 100 (better than 100% compared with alternatives), Otter Tail has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Otter Tail Below-Average Financial Performance
| COMBINED PERFORMANCE | June 6, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 17 |
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| GROWTH | ||||||||
| GROWTH | 25 |
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| SAFETY | ||||||||
| SAFETY | 99 |
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| COMBINED | ||||||||
| COMBINED | 31 |
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ANALYSIS: With an Obermatt Combined Rank of 31 (worse than 69% compared with investment alternatives), Otter Tail (Electric Utilities, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Otter Tail are low in value (priced high) with a consolidated Value Rank of 17 (worse than 83% of alternatives) and show below-average growth (Growth Rank of 25) but are safely financed (Safety Rank of 100), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 31, is a hold recommendation based on Otter Tail's financial characteristics. As the company Otter Tail's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 17) and low growth (Obermatt Growth Rank of 25), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 100) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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