Avista (NYSE:AVA) & Otter Tail (NASDAQ:OTTR) Critical Survey

Avista (NYSE:AVA) and Otter Tail (NASDAQ:OTTR) are both mid-cap utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, dividends, institutional ownership and risk.

Institutional and Insider Ownership

85.2% of Avista shares are owned by institutional investors. Comparatively, 61.3% of Otter Tail shares are owned by institutional investors. 1.0% of Avista shares are owned by insiders. Comparatively, 2.0% of Otter Tail shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Avista and Otter Tail”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avista	$1.96 billion	1.74	$193.00 million	$2.38	17.47
Otter Tail	$1.30 billion	2.90	$275.89 million	$6.56	13.74

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

Dividends

Avista pays an annual dividend of $1.97 per share and has a dividend yield of 4.7%. Otter Tail pays an annual dividend of $2.31 per share and has a dividend yield of 2.6%. Avista pays out 82.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Otter Tail pays out 35.2% of its earnings in the form of a dividend. Avista has increased its dividend for 23 consecutive years and Otter Tail has increased its dividend for 12 consecutive years. Avista is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Avista and Otter Tail, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avista	1	4	1	0	2.00
Otter Tail	0	2	1	0	2.33

Avista presently has a consensus price target of $39.50, suggesting a potential downside of 5.03%. Otter Tail has a consensus price target of $83.00, suggesting a potential downside of 7.93%. Given Avista’s higher probable upside, equities analysts plainly believe Avista is more favorable than Otter Tail.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Avista	9.83%	7.29%	2.38%
Otter Tail	21.16%	15.36%	7.23%

Risk and Volatility

Avista has a beta of 0.23, suggesting that its stock price is 77% less volatile than the S&P 500. Comparatively, Otter Tail has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500.

Summary

Otter Tail beats Avista on 10 of the 16 factors compared between the two stocks.

About Avista

Avista Corporation, together with its subsidiaries, operates as an electric and natural gas utility company. It operates in two segments, Avista Utilities and AEL&P. The Avista Utilities segment provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho; and natural gas distribution services in parts of northeastern and southwestern Oregon, as well as generates electricity in Washington, Idaho, Oregon, and Montana. This segment also engages in the supply of electricity to customers in Montana; and wholesale purchase and sale of electricity and natural gas. The AEL&P segment offers electric services in Juneau, Alaska. The company generates electricity through hydroelectric, thermal, wind, and solar generation facilities. As of December 31, 2023, it supplied retail electric services to approximately 416,000 customers; and retail natural gas services to approximately 381,000 customers. The company also operates five hydroelectric generation facilities with capacity of 102.7 MW; and four diesel generating facilities with a capacity of 107.5 MW. It also engages in venture fund investments, real estate investments, and other investments. Avista Corporation was incorporated in 1889 and is headquartered in Spokane, Washington.

About Otter Tail

Otter Tail Corporation, together with its subsidiaries, engages in electric utility, manufacturing, and plastic pipe businesses in the United States. It operates through three segments: Electric, Manufacturing, and Plastics. The 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 markets. This segment generates electricity through coal, fuel oil, solar, wind, and natural gas. It serves approximately residential, commercial, and industrial customers. The Manufacturing segment engages in the contract machining, metal parts stamping, fabrication and painting, production of plastic thermoformed horticultural containers, life science and industrial packaging, and material handling components and extruded raw material stock for the recreational vehicle, lawn and garden, agricultural, construction, and industrial and energy equipment end markets. The Plastics segment manufactures polyvinyl chloride pipes for municipal water, rural water, wastewater, storm drainage and water reclamation system, and other uses for customers in the horticulture, medical and life sciences, industrial, recreation, and electronics industries. 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.