Earnings Beat: Otter Tail Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a good week for Otter Tail Corporation (NASDAQ:OTTR) shareholders, because the company has just released its latest third-quarter results, and the shares gained 5.1% to US$82.49. It looks to have been a bit of a mixed result. While revenues of US$338m fell 10% short of what the analysts had predicted, statutory earnings per share (EPS) of US$2.03 exceeded expectations by 6.0%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Otter Tail

Taking into account the latest results, Otter Tail's three analysts currently expect revenues in 2025 to be US$1.36b, approximately in line with the last 12 months. Statutory earnings per share are forecast to crater 23% to US$5.63 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.46b and earnings per share (EPS) of US$4.62 in 2025. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the considerable lift to to the earnings per share numbers.

The average price target rose 16% to US$81.00, with the analysts signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in revenue estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Otter Tail's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 1.1% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that Otter Tail is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Otter Tail's earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Otter Tail going out to 2026, and you can see them free on our platform here..

Plus, you should also learn about the 2 warning signs we've spotted with Otter Tail (including 1 which is concerning) .

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.