NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share 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 has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- OTTR's very impressive revenue growth greatly exceeded the industry average of 7.2%. Since the same quarter one year prior, revenues leaped by 90.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- OTTER TAIL CORP reported significant earnings per share improvement 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 year. We feel that this trend should continue. During the past fiscal year, OTTER TAIL CORP turned its bottom line around by earning $0.45 versus -$0.32 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus $0.45).
- The debt-to-equity ratio is somewhat low, currently at 0.81, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
- 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 underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for OTTER TAIL CORP is currently extremely low, coming in at 10.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -16.80% is significantly below that of the industry average.
Otter Tail Corporation engages in electric and nonelectric operations in the United States and internationally. It operates in six segments: Electric, Plastics, Manufacturing, Health Services, Food Ingredient Processing, and Other Business Operations. The company has a P/E ratio of 48, above the average utilities industry P/E ratio of 25 and above the S&P 500 P/E ratio of 17.7. Otter Tail has a market cap of $792.6 million and is part of the
industry. Shares are up 1.1% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet RatingsStaff