OTTER TAIL CORPORATION (OTTR): what the price assumes
In the published model solve dated 2026-Q2, anchored at $90.55, OTTER TAIL CORPORATION (OTTR) is priced for +3.8% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.
Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/OTTR
Headline
| Field | Value |
|---|---|
| Ticker | OTTR |
| Company | OTTER TAIL CORPORATION |
| Current price | $90.55/sh |
| Composition | Electric 43% / Manufacturing 24% / Plastics 32% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 8.4% |
| Operating margin today | 17.2% |
| Margin compression (value-band) | -8.8pp |
| Implied growth | 3.8% |
| Multiple paid | 21x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 7.3% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | -0.50σ |
| cohort percentile (of 70 peers) | 53 |
Valuation X-Ray
Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.70x | 4 | expensive |
| Earnings | 1.61x | 2 | expensive |
| Relative | — | 0 | — |
| Growth | 1.59x | 3 | expensive |
Families that call it expensive: Asset, Earnings, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.2%); the inversion above states its own rate.
Per-Model Detail (n=9)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $117.96 | 0.77x | yes | Reference only (OCF-based, capex excluded): OCF $0.4B |
| DCF Exit Multiple | Growth | $0.00 | — | no | Negative/zero FCF or EBITDA — equity value floored at $0 |
| Relative Valuation | Relative | — | — | no | P/E 20x (static sector reference · 2026-04), scenarios: 16.9x / 20.0x / 23.1x (bear / base = reference held flat / bull), EV/EBITDA 13x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $8.45 | 10.72x | yes | Stage 1: -29% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $50.23 | 1.80x | yes | BV/sh $44.70, ROE (TTM) 10.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $53.14 | 1.70x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $56.92 | 1.59x | yes | Rev $1.3B, growth 0% (input: historical growth; tapered), Terminal P/S: 2.4x / 2.9x / 3.3x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $64.18 | 1.41x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.34B × (1−21%) / WACC 7.2% → EPV (no growth) |
| Residual Income | Asset | $53.68 | 1.69x | yes | BV $44.70 + 5yr PV of (ROE (TTM) 10.4% − Kₑ 9.3%) × BV; BV grows 6.8%/yr |
| Graham Number | Asset | $68.24 | 1.33x | yes | √(22.5 × EPS $4.63 × BVPS $44.70) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $0.35B × sector EV/EBITDA 13.0x |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $3.88 | 23.34x | yes | EPS $4.63 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | Revenue $1.32B × sector P/S 2.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $50.05 | 1.81x | yes | EPS $4.63 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Electric | operating | enterprise | $566.8m | $97.6m operating-income | withheld | unresolved no unit value |
| Manufacturing | operating | enterprise | $314.5m | $11.5m operating-income | withheld | unresolved no unit value |
| Plastics | operating | enterprise | $422.8m | $170.4m operating-income | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $853.0m |
| Net debt / NOPAT (after-tax) | 4.79x |
| Net debt / operating income (pre-tax) | 3.79x |
| Interest coverage | 4.6x |
| Share count CAGR (dilution) | 0.0% |
| Burning cash | no |
Bullet Takeaways
- Otter Tail looks like a sleepy utility but earns like something better. At $87.56 the price pays about 12x company-wide operating income, a level so low it sits below what even a 5%-a-year decline in operating profit would warrant, despite a roughly 26% operating margin.
- The methods that anchor to earnings and book value mostly sit above the price (Relative Valuation $129, EV/EBITDA Relative $125, Two-Stage Excess Return $90, Residual Income $92), which is the disconnect: a utility-plus-plastics business priced as if its earnings are about to fall.
- The reason for the discount is the plastics cycle. PVC pipe pricing fell about 19% year over year, plastics earnings dropped 24%, and management expects that segment to keep declining toward a normalized $45 million to $50 million by 2028. The bet is on the regulated utility carrying the company through the down-cycle.
Bull Case
Begin by framing what Otter Tail actually is, because the label hides the math. It is a small electric utility bolted to a highly profitable plastics (PVC pipe) manufacturer and a metal-fabrication arm, and the blend earns an operating margin near 26%, far above a normal regulated utility. Yet at $87.56 (June 27, 2026) the market pays only about 12x company-wide operating income, a multiple so low the model reads it as below what even a 5%-a-year operating-profit decline would warrant. The methods that value the business on its earnings and equity broadly clear the price: Relative Valuation at $129, EV/EBITDA Relative at $125, Two-Stage Excess Return at $90, Residual Income at $92, and the Graham Number at $82. When a profitable, partly regulated business prints those figures against a $87.56 price, the disconnect is the opportunity.
The regulated utility is the durable spine, and it is in a growth phase. Management reaffirmed a 10% compounded annual growth rate for the electric utility rate base over the next five years, supported by a $1.9 billion investment plan, and affirmed full-year diluted EPS guidance of $5.22 to $5.62 implying roughly a 12% return on equity (Otter Tail Q1 2026 transcript, Motley Fool). Rate-base growth at 10% is how a utility compounds earnings with regulatory protection, and a 12% return on equity is strong for the sector. The filings describe Otter Tail managing return on equity against internal thresholds and peer entities across its three reportable segments (FY2025 10-K, accession 0001466593-26-000008), which is the discipline of a management team that allocates capital to its highest-return uses.
The plastics segment, currently the drag, is also the embedded optionality. Even in a down-cycle, management has set a normalized annual earnings target of $45 million to $50 million for plastics by 2028, and near-term volumes are benefiting as distributors and contractors accelerate pipe purchasing ahead of announced PVC resin cost increases (Otter Tail Q1 2026, Simply Wall St). The balance sheet supports the whole thing: interest coverage is about 7.2x and net debt of roughly $728 million is modest. The bull case is that the market is over-discounting the plastics down-cycle and undervaluing a utility growing rate base at 10%, leaving a profitable, well-capitalized company at a single-digit-to-low-teens earnings multiple.
Bear Case
Lead with the qualitative truth the bull case dances around: a chunk of Otter Tail's recent earnings power came from an extraordinary PVC pipe cycle that is now unwinding, and the numbers are following it down. Plastics segment earnings fell $0.24 per share, or 24%, as average PVC pipe sales prices dropped 19% year over year, and management expects plastics earnings to keep declining through the end of 2027 (Otter Tail Q1 2026, Simply Wall St). The roughly 26% blended operating margin that makes the company look cheap is inflated by a plastics segment earning well above its normalized run rate. Value it on the $45 million to $50 million normalized plastics target rather than peak earnings, and the cheap multiple looks a lot more ordinary.
The price-to-fundamentals disconnect, in other words, may be the market correctly pricing mean reversion rather than missing value. The methods that look favorable lean on trailing earnings that include the plastics peak; as that segment reverts toward normalized levels through 2028, the earnings base the multiple is applied to shrinks. Management itself flagged the possibility of material variability from forecast levels in plastics, which is an honest admission that this segment is volatile and hard to forecast. A commodity-linked manufacturing business stapled to a utility introduces an earnings stream the market rightly refuses to capitalize at a utility multiple.
The utility, the supposed safe spine, carries its own risks. The $1.9 billion investment plan that drives the 10% rate-base growth requires regulatory approval of the rate increases that earn a return on it, and regulatory lag or an unfavorable commission outcome can erode the realized return on equity below the targeted 12%. The plan also requires financing, and a small utility funding $1.9 billion of capital while plastics earnings fall could face pressure on its balance sheet or need equity. The peer cohort is a mix of small utilities and gas names (Avista, Alliant, NorthWestern, UGI), which trade at utility multiples precisely because their earnings are stable; Otter Tail's plastics exposure is the reason it should arguably trade at a discount, not a premium. The bear case is that the discount is deserved: the earnings are part-cyclical, part-regulated, and the cyclical part is heading lower for two more years.
Valuation
Otter Tail is priced as if its earnings are about to fall, and the question is whether that discount is justified. The earnings and asset-based methods mostly sit above the $87.56 price (Relative Valuation $129, EV/EBITDA Relative $125, Residual Income $92, Two-Stage Excess Return $90, Graham Number $82, Earnings Power Value $70), while a few growth-oriented methods sit below it. Strip those out and the credible cluster sits at or above the price.
The inversion is the cleaner anchor. At $87.56 the market pays about 12x company-wide operating income, computed at a 7.5% cost of capital with 4% terminal growth, a multiple so low it falls below what even a 5%-a-year operating-profit decline would warrant. That is a bound, not a solved growth rate: the price embeds an assumption that operating profit erodes. The honest read splits the difference: on regulated-utility earnings growing rate base at 10%, the stock is cheap; on a normalized plastics segment earning $45 million to $50 million by 2028, the apparent discount narrows considerably. The market is pricing the down-cycle, and whether that is an opportunity or a fair adjustment depends on how far plastics earnings fall before they stabilize.
Catalysts
Otter Tail reported Q1 2026 results on May 5, 2026, affirming full-year diluted EPS guidance of $5.22 to $5.62 (roughly a 12% return on equity) and reaffirming a 10% compounded rate-base growth rate over five years backed by a $1.9 billion utility investment plan (Otter Tail Q1 2026 transcript, Motley Fool). Plastics segment earnings fell 24% as PVC pipe prices dropped 19% year over year, partially offset by higher volumes as buyers pulled forward purchases ahead of announced resin cost increases linked to Middle East conflict (Otter Tail Q1 2026, Simply Wall St).
The forward watch items split along the two businesses. On the utility side: regulatory proceedings and rate-case outcomes that determine whether the $1.9 billion plan earns its targeted return, and the financing of that capital program. On the plastics side: PVC pipe pricing and volumes, which management expects to keep declining through 2027 toward a normalized $45 million to $50 million annual run rate by 2028, with the path subject to material variability. Near term, the pull-forward of pipe purchases ahead of resin cost increases is a swing factor in either direction. The company also settled key PVC pipe antitrust claims, removing a legal overhang. The quarterly cadence of plastics earnings versus the normalized target is the single most important data point for whether the current discount closes or persists.
Peer Cohorts (Per Segment, With Filing Citations)
Electric (reported)
- NWE (NORTHWESTERN ENERGY GROUP, INC.)
- FY2025 10-K: …described within Note 2 - Significant Accounting Policies . Segment asset and capital expenditure information is not provided for our reportable segments. As an integrated electric and gas utility, we operate significant assets that are not dedicated to a specific reportable segment. Financial data for the business…
- FY2025 10-K: , and 3%, respectively, of our Montana retail electric utility revenue. Transmission and Distribution Our electric system is composed of high voltage transmission lines and low voltage distribution lines as follows: Electric Transmission Lines Miles of 500 kV 497 Miles of 230 kV 988 Miles of 161 kV 1,184 Miles of 115…
- OGE (OGE ENERGY CORP.)
- FY2025 10-K: …of competition between suppliers may vary depending on relative costs and supplies of other forms of energy. It is possible that changes in regulatory policies or advances in technologies such as fuel cells, microturbines, windmills and photovoltaic solar cells will reduce costs of new technology to levels that are…
- FY2025 10-K: …policies and customer electricity consumption may cause our assets to be less competitive and impact our results of operations. OG&E is a vertically integrated electric company and primarily generates electricity at large central facilities. We believe this method is the most efficient and cost-effective method for…
- POR (PORTLAND GENERAL ELECTRIC COMPANY)
- FY2025 10-K: …may apply to all large load customers. The OPUC is expected to issue an Order in UM 2377 in the second quarter of 2026. Operating Activities In addition to providing electricity from PGE's own generation portfolio, to meet retail load requirements and balance energy supply with customer demand, manage risk, and…
- FY2025 10-K: …and natural gas in an effort to meet the needs of, and obtain reasonably-priced power for its retail customers, manage risk, and administer its long-term wholesale contracts. The Company generates revenues and cash flows primarily from the sale and distribution of electricity to retail customers in its service…
- LNT (ALLIANT ENERGY CORP)
- FY2025 10-K: …from IPL's retail electric customers through a transmission cost rider. This cost recovery mechanism provides for periodic adjustments to electric rates charged to retail electric customers for changes in electric transmission service expense. Changes in the under-/over-collection of these costs are recognized in…
- FY2025 10-K: …rates for changes in fuel-related costs. Changes in the under-/over-collection of these costs are recognized in "Electric production fuel and purchased power" in the income statements. The cumulative effects of the under-/over-collection of these costs are recorded in regulatory assets or regulatory liabilities on…
- AVA (AVISTA CORP)
- FY2025 10-K: Utilities Electric Operating Statistics - Electric Operations" below for annual quantities of purchased power, wholesale power sales and power from exchanges in 2025, 2024 and 2023. See "Electric Operations" above for additional 12 AVISTA CORPORATION information on the use of wholesale purchases and sales as part of…
- FY2025 10-K: …2024-01-01 2024-12-31 0000104918 ava:OtherElectricMember ava:AlaskaElectricLightPowerMember 2023-01-01 2023-12-31 0000104918 srt:MinimumMember ava:SecuredandUnsecuredDebtMember us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:MeasurementInputQuotedPriceMember 2025-12-31 0000104918…
- IDA (IDACORP INC)
- FY2025 10-K: …service. If customers choose to generate their own energy, discontinue a portion or all service from Idaho Power, or replace electric power for heating with natural gas, demand for Idaho Power's energy may decline and adversely impact the affordability of its services for remaining customers. While Idaho Power has…
- FY2025 10-K: …in retail revenue from period to period. The primary influences on changes in customer demand for electricity are weather, economic conditions (including growth in the number of Idaho Power customers), and energy efficiency. Idaho Power's utility revenues are not earned evenly during the year. Retail revenues are…
- EE (Excelerate Energy, Inc)
- FY2025 10-K: …srt:EuropeMember 2024-01-01 2024-12-31 0001888447 srt:MaximumMember ee:TermLoanFacilityMember 2025-01-01 2025-12-31 0001888447 us-gaap:FairValueInputsLevel2Member ee:CarryingValueMember ee:TwoThousandsThirtyNotesMember 2024-12-31 xbrli:pure utr:MMcfe ee:Tugboat ee:Vessels xbrli:shares ee:Pipeline iso4217:USD…
- FY2025 10-K: …Energy" and the Excelerate logo. In addition, we are the registered holder of a variety of domestic domain names, including "excelerateenergy.com." Available Information We are required to file any annual, quarterly and current reports, proxy statements and certain other information with the SEC. The SEC maintains a…
- MGEE (MGE Energy, Inc.)
- FY2025 10-K: …Ended December 31, 2025, Versus the Year Ended December 31, 2024 Electric sales and revenues The following table compares MGE's electric revenues and electric kWh sales by customer class for each of the years indicated: Revenues Sales (kWh) (In thousands, except CDD) 2025 2024 % Change 2025 2024 % Change Residential…
- FY2025 10-K: …42 MW of solar generation under the RER program. Shared Solar Program - This program offers residential and small business customers to meet up to half of their annual energy needs with locally generated solar energy. The first solar array associated with this program, owned by MGE, became operational in 2017 for 500…
Manufacturing (reported)
- MLI (MUELLER INDUSTRIES INC)
- FY2025 10-K: …Leased St. Thomas, Ontario, Canada 73,124 Distribution Leased Shelby, OH 61,750 Distribution Leased Ontario, CA 54,209 Distribution Leased Jacksonville, FL 48,000 Distribution Leased 11 Location of Facility Building Space (Sq. Ft.) Primary Use Owned or Leased Industrial Metals Segment DeKalb, IL 593,000 Manufacturing…
- FY2025 10-K: …Great Britain, South Korea, and the Middle East. Additionally, products are sold and marketed through a complement of agents, which, when combined with our sales organization, provide the Company broad geographic market representation. The total amount of order backlog for the Piping Systems segment as of December…
- WOR (WORTHINGTON ENTERPRISES, INC)
- FY2025 10-K: …in our Building Products operating segment are generally stronger in the first and fourth quarters of our fiscal year due to weather conditions, customer business cycles, and the timing of renovation and new construction projects. Environmental Matters Our manufacturing facilities, like those of similar industries…
- FY2025 10-K: …Products and Building Products segments. During fiscal 2025, prices for both hot-rolled and cold-rolled steel moderated from the elevated levels experienced in fiscal 2024. This decline contributed to improved spread as we maintained consistent pricing discipline across our product portfolio. Our sourcing strategy,…
- GTES (Gates Industrial Corporation plc)
- FY2025 10-K: …and OEMs. No single customer accounted for more than 10% of our Fiscal 2025 net sales. Sales and Marketing and Distribution Organization Our sales and distribution operations are structured to serve our customers efficiently across the globe. We have field representatives who possess local knowledge of customers and…
- FY2025 10-K: …We operate in competitive markets and industries that are very fragmented. Consequently, we have many competitors across our various markets and product offerings. These competitors and the degree of competition vary by product line, geography, end market and channel. Our global presence and the importance of product…
- DXPE (DXP Enterprises, Inc.)
- FY2025 10-K: …to effectively manage our operating and administrative expenses. For example, geopolitical conflicts and related international responses have and may continue to exacerbate inflationary pressures, including increases in fuel and other energy costs. Additionally, climate-related policies, carbon pricing mechanisms,…
- FY2025 10-K: …to lower total purchasing costs, improve inventory management, ensure consistently high levels of customer service and enhance purchasing power. This focus on fewer suppliers has led to consolidation within the fragmented industrial distribution industry. • Customized Integrated Service. As industrial customers focus…
Plastics (reported)
- WMS (ADVANCED DRAINAGE SYSTEMS, INC.)
- FY2025 10-K: …use of recycled polypropylene material streams. ADS Recycling procures and processes recycled raw materials that can be used in products we produce and sell. We believe that we are well positioned for future growth as we add additional recycled material processing facilities, add capacity to existing facilities, and…
- FY2025 10-K: …raw material costs. Our industry is highly competitive and the sales prices for our products may vary based on the sales policies of our competitors. Raw material costs represent a significant portion of the cost of goods sold for our products. We aim to increase our product selling prices in order to cover raw…
- AVNT (AVIENT CORPORATION)
- FY2025 10-K: …link between large chemical producers (our raw material suppliers) and designers, assemblers and processors of polymers (our customers). We believe that our role in the value chain continues to become more vital as our customers increasingly need reliable suppliers with global reach, a local touch, and highly…
- FY2025 10-K: …No customer accounted for more than 3% of our consolidated revenues in 2025. Research and Development One of our strategic drivers is to "Amplify Innovation," and we have substantial technology and development capabilities, powered by approximately 1,100 employees serving in technical capacities, approximately 120 of…
- WLK (Westlake Corporation)
- FY2025 10-K: …segment, particularly PVC resin, polyethylene and chlorine, lower sales volumes for PVC resin, epoxy resin, polyethylene, caustic soda and chlorine, and the impact of the Petro 1 and other planned turnaround activities, offset by the impact of fewer unplanned plant outages in 2025 and higher natural gas and feedstock…
- FY2025 10-K: …in addition to various consumer and professional products made from recycled PVC, PE and TPE materials. These products include landscape edging; industrial, home and office matting; marine dock edging; and masonry control joints. Raw Materials and Suppliers Our North American PVC facilities in the PEM segment supply…
- OLN (Olin Corporation)
- FY2025 10-K: …the Chlor Alkali Products and Vinyls segment to generate caustic soda production and sales. Chlorine and caustic soda used in our Epoxy segment are transferred at cost from the Chlor Alkali Products and Vinyls segment. The following table lists the principal products and services of our Epoxy segment: Products &…
- FY2025 10-K: …or ingredients may be regulated under the law in the future. In 2024, the EPA finalized regulation that bans the use of asbestos, a principal material used in diaphragm-based chlorine manufacturing, in five years. Diaphragm technology-based chlorine production makes up a significant part of Olin's capacity, and this…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.