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3 Stocks Pushing The Utilities Sector Lower

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

The Utilities sector as a whole closed the day down 0.5% versus the S&P 500, which was down 0.3%. Laggards within the Utilities sector included Ellomay Capital ( ELLO), down 2.4%, Centrais Eletricas Brasileiras ( EBR.B), down 2.7%, Southcross Energy Partners ( SXE), down 2.8%, Otter Tail ( OTTR), down 2.5% and Atlantic Power ( AT), down 2.8%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the sector lower today:

Otter Tail ( OTTR) is one of the companies that pushed the Utilities sector lower today. Otter Tail was down $0.75 (2.5%) to $28.79 on average volume. Throughout the day, 122,809 shares of Otter Tail exchanged hands as compared to its average daily volume of 103,900 shares. The stock ranged in price between $28.75-$29.51 after having opened the day at $29.49 as compared to the previous trading day's close of $29.54.

Otter Tail Corporation is engaged in electric and nonelectric operations primarily in the United States, Canada, and Mexico. It operates in four segments: Electric, Manufacturing, Plastics, and Construction. Otter Tail has a market cap of $1.1 billion and is part of the utilities industry. Shares are up 0.9% year-to-date as of the close of trading on Tuesday. Currently there are no analysts who rate Otter Tail a buy, no analysts rate it a sell, and 2 rate it a hold.

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TheStreet Ratings rates Otter Tail as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from TheStreet Ratings analysis on OTTR go as follows:

  • OTTER TAIL CORP has improved earnings per share by 43.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, OTTER TAIL CORP increased its bottom line by earning $1.38 versus $1.07 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus $1.38).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Electric Utilities industry average. The net income increased by 39.5% when compared to the same quarter one year prior, rising from $15.36 million to $21.43 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 10.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.93, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that OTTR's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, OTTER TAIL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

You can view the full analysis from the report here: Otter Tail Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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