A week ago,Otter Tail Corporation(NASDAQ:OTTR) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of US$236m, some 2.3% above estimates, and statutory earnings per share (EPS) coming in at US$0.87, 33% ahead of expectations. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for Otter Tail
NasdaqGS:OTTR Earnings and Revenue Growth November 6th 2020
Following the latest results, Otter Tail's three analysts are now forecasting revenues of US$945.3m in 2021. This would be a solid 8.4% improvement in sales compared to the last 12 months. Per-share earnings are expected to expand 14% to US$2.47. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$942.1m and earnings per share (EPS) of US$2.45 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$49.67. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Otter Tail at US$51.00 per share, while the most bearish prices it at US$48.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Otter Tail's rate of growth is expected to accelerate meaningfully, with the forecast 8.4% revenue growth noticeably faster than its historical growth of 4.0%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.8% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Otter Tail is expected to grow much faster than its industry.The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$49.67, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Otter Tail. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Otter Tail analysts - going out to 2024, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified2 warning signs for Otter Tailthat you should be aware of.
This article by Simply Wall St is general in nature. 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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