Stock Analysis

Have Otter Tail Corporation (NASDAQ:OTTR) Insiders Been Selling Their Stock?

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NasdaqGS:OTTR
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We'd be surprised if Otter Tail Corporation (NASDAQ:OTTR) shareholders haven't noticed that the Independent Director, John Erickson, recently sold US$113k worth of stock at US$56.31 per share. On the bright side, that sale was only 1.3% of their holding, so we doubt it's very meaningful, on its own.

Our analysis indicates that OTTR is potentially undervalued!

Otter Tail Insider Transactions Over The Last Year

In fact, the recent sale by John Erickson was the biggest sale of Otter Tail shares made by an insider individual in the last twelve months, according to our records. So it's clear an insider wanted to take some cash off the table, even below the current price of US$57.79. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 1.3% of John Erickson's stake.

Otter Tail insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NasdaqGS:OTTR Insider Trading Volume November 24th 2022

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Does Otter Tail Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Otter Tail insiders own about US$47m worth of shares. That equates to 2.0% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Otter Tail Tell Us?

An insider sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. But since Otter Tail is profitable and growing, we're not too worried by this. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 3 warning signs for Otter Tail (1 is a bit concerning!) and we strongly recommend you look at these before investing.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

What are the risks and opportunities for Otter Tail?

Otter Tail Corporation, together with its subsidiaries, engages in electric utility, manufacturing, and plastic pipe businesses in the United States.

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Rewards

  • Price-To-Earnings ratio (9.4x) is below the US market (15.3x)

  • Earnings grew by 104.3% over the past year

Risks

  • Earnings are forecast to decline by an average of 17.5% per year for the next 3 years

  • Significant insider selling over the past 3 months

  • Has a high level of debt

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