Otter Tail (OTTR): Assessing Valuation After Recent Uptick and Long-Term Performance Data

Otter Tail (OTTR) shares saw an uptick of about 1% in recent trading, catching interest from investors after the company's latest monthly performance data. The movement follows a stretch of muted returns over the past three months.

See our latest analysis for Otter Tail.

With Otter Tail’s share price now at $76.08, the latest uptick stands out against a recent period of sluggishness. While the 1-day share price return is up 1.37%, longer-term momentum has softened, as seen in its 1-year total shareholder return of -0.65%. However, over a 5-year stretch, total shareholder returns of 121.94% point to substantial long-term performance. This suggests that even in quieter spells, the company’s track record remains solid.

If you’re interested in what else is gaining ground, this could be a perfect moment to discover fast growing stocks with high insider ownership

With shares lagging over the past year, but the company boasting impressive long-term returns, the question remains: is Otter Tail undervalued right now, or is the current price already factoring in all future potential?

Most Popular Narrative: 8% Undervalued

According to the most popular narrative, Otter Tail’s fair value is set at $83, which is around 8% above its last close price of $76.08. This positions the stock in a potentially attractive spot for investors closely watching its valuation versus where shares are currently trading.

Ongoing and possibly intensifying environmental regulations, despite recent EPA reconsiderations, pose continued risk to Otter Tail's coal assets. This could lead to elevated compliance costs, unplanned capital expenditures, and stranded asset charges, compressing net margins and long-term return on equity.

Read the complete narrative.

Can Otter Tail overcome these looming regulatory pressures, or are analysts relying on aggressive profit and growth assumptions to justify that higher price? Uncover which future earnings, margin shifts, and pricing multiples are behind this call. See the bold projections that shape today’s fair value debate.

Result: Fair Value of $83 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, unexpected demand growth or successful large customer contracts could challenge the gloomy outlook. This could support stronger long-term earnings than projected.

Find out about the key risks to this Otter Tail narrative.

Another View: Testing the Fair Value with Multiples

While analysts lean on future earnings growth to justify their price target, another method focuses on today's price relative to profits. Otter Tail trades at just 11.1 times earnings, putting it below both peer (23.6x) and industry (21.2x) averages, and under the market’s fair ratio of 11.9x. This suggests less downside risk and may appeal to cautious investors. However, could a focus on low multiples mask potential growth headwinds?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Otter Tail for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Otter Tail Narrative

If this perspective doesn't match your own take or you’d rather dig into the numbers yourself, feel free to explore the data and shape your own thesis in just a few minutes. Do it your way

A great starting point for your Otter Tail research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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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.

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