Results: Otter Tail Corporation Beat Earnings Expectations And Analysts Now Have New Forecasts

Investors in Otter Tail Corporation (NASDAQ:OTTR) had a good week, as its shares rose 6.5% to close at US$92.73 following the release of its quarterly results. It looks like a credible result overall - although revenues of US$347m were what the analysts expected, Otter Tail surprised by delivering a (statutory) profit of US$1.77 per share, an impressive 22% above what was forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Otter Tail

Taking into account the latest results, the consensus forecast from Otter Tail's three analysts is for revenues of US$1.43b in 2024. This reflects a satisfactory 5.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to plummet 23% to US$5.66 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.38b and earnings per share (EPS) of US$5.30 in 2024. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Despite these upgrades,the analysts have not made any major changes to their price target of US$72.50, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Otter Tail analyst has a price target of US$75.00 per share, while the most pessimistic values it at US$70.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Otter Tail's revenue growth is expected to slow, with the forecast 6.9% annualised growth rate until the end of 2024 being well below the historical 12% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.8% annually. Even after the forecast slowdown in growth, it seems obvious that Otter Tail is also expected to grow faster than the wider industry.

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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$72.50, with the latest estimates not enough to have an impact on their price targets.

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. We have forecasts for Otter Tail going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Otter Tail (1 doesn't sit too well with us!) that you need to take into consideration.

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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.