Reviewing Otter Tail (NASDAQ:OTTR) and NextEra Energy (NASDAQ:NEE)

Otter Tail (NASDAQ:OTTR) and NextEra Energy (NYSE:NEE) are both utilities companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and price targets for Otter Tail and NextEra Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Otter Tail 0 0 1 0 3.00
NextEra Energy 0 1 11 0 2.92

Otter Tail presently has a consensus price target of $60.00, indicating a potential upside of 21.58%. NextEra Energy has a consensus price target of $214.50, indicating a potential downside of 3.33%. Given Otter Tail’s stronger consensus rating and higher probable upside, analysts clearly believe Otter Tail is more favorable than NextEra Energy.

Dividends

Otter Tail pays an annual dividend of $1.40 per share and has a dividend yield of 2.8%. NextEra Energy pays an annual dividend of $5.00 per share and has a dividend yield of 2.3%. Otter Tail pays out 68.0% of its earnings in the form of a dividend. NextEra Energy pays out 64.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Otter Tail has raised its dividend for 5 consecutive years and NextEra Energy has raised its dividend for 9 consecutive years.

Institutional & Insider Ownership

43.4% of Otter Tail shares are owned by institutional investors. Comparatively, 76.2% of NextEra Energy shares are owned by institutional investors. 1.7% of Otter Tail shares are owned by company insiders. Comparatively, 0.5% of NextEra Energy shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Otter Tail and NextEra Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Otter Tail 8.57% 10.78% 3.82%
NextEra Energy 18.73% 10.46% 3.75%

Valuation and Earnings

This table compares Otter Tail and NextEra Energy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Otter Tail $916.45 million 2.14 $82.35 million $2.06 23.96
NextEra Energy $16.73 billion 6.36 $6.64 billion $7.70 28.82

NextEra Energy has higher revenue and earnings than Otter Tail. Otter Tail is trading at a lower price-to-earnings ratio than NextEra Energy, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Otter Tail has a beta of 0.35, meaning that its share price is 65% less volatile than the S&P 500. Comparatively, NextEra Energy has a beta of 0.22, meaning that its share price is 78% less volatile than the S&P 500.

Summary

NextEra Energy beats Otter Tail on 10 of the 17 factors compared between the two stocks.

Otter Tail Company Profile

Otter Tail Corporation, together with its subsidiaries, engages in electric, manufacturing, and plastics businesses in the United States. The company's Electric segment produces, transmits, distributes, and sells electric energy in Minnesota, North Dakota, and South Dakota; and operates as a participant in the Midcontinent Independent System Operator, Inc. markets. This segment generates electricity through coal, wind and hydro, and natural gas and oil sources. It serves approximately 130,000 residential, commercial, industrial, and other customers. Otter Tail Corporation's Manufacturing segment stamps, fabricates, welds, paints, and laser cuts metal components for use in the recreational vehicle, agricultural, oil and gas, lawn and garden, industrial equipment, health and fitness, and enclosure industries; manufactures and fabricates parts for off-road equipment, mining machinery, oil fields and offshore oil rigs, wind industry components, broadcast antennae, and farm equipment; and provides laser cutting services and stamping to weldments and assemblies for metal fabrication buyers and original equipment manufacturers. It also manufactures and sells thermoformed products for the horticulture industry; and clamshell packing, blister packs, returnable pallets, and handling trays for shipping and storing odd-shaped or difficult-to-handle parts for customers in the medical and life sciences, industrial, recreation, and electronics industries. The company's Plastics segment manufactures polyvinyl chloride pipes for municipal water, rural water, wastewater, storm drainage system, and other uses. This segment markets its products to wholesalers and distributors through independent sales representatives, company salespersons, and customer service representatives. The company was formerly known as Otter Tail Power Company and changed its name to Otter Tail Corporation in 2001. Otter Tail Corporation was founded in 1907 and is headquartered in Fergus Falls, Minnesota.

NextEra Energy Company Profile

NextEra Energy, Inc., through its subsidiaries, generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear, and natural gas-fired facilities. It also provides risk management services related to power and gas consumption. As of February 16, 2018, the company operated approximately 46,790 megawatts of net generating capacity. As of December 31, 2017, it served approximately 10 million people through approximately 5 million customer accounts in the east and lower west coasts of Florida with approximately 75,000 circuit miles of transmission and distribution lines and approximately 620 substations. The company was formerly known as FPL Group, Inc. and changed its name to NextEra Energy, Inc. in 2010. NextEra Energy, Inc. was founded in 1925 and is headquartered in Juno Beach, Florida.

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