Critical Analysis: Otter Tail (NASDAQ:OTTR) & Innergex Renewable Energy (OTCMKTS:INGXF)

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

Volatility & Risk

Innergex Renewable Energy has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, Otter Tail has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500.

Insider and Institutional Ownership

61.3% of Otter Tail shares are held by institutional investors. 4.7% of Innergex Renewable Energy shares are held by insiders. Comparatively, 1.9% of Otter Tail shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Innergex Renewable Energy	5.51%	5.30%	0.76%
Otter Tail	21.48%	15.96%	7.46%

Earnings & Valuation

This table compares Innergex Renewable Energy and Otter Tail”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Innergex Renewable Energy	$764.31 million	2.69	$11.60 million	$0.14	72.18
Otter Tail	$1.33 billion	2.81	$301.66 million	$6.63	13.45

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

Dividends

Innergex Renewable Energy pays an annual dividend of $0.26 per share and has a dividend yield of 2.6%. Otter Tail pays an annual dividend of $2.10 per share and has a dividend yield of 2.4%. Innergex Renewable Energy pays out 185.7% 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 31.7% of its earnings in the form of a dividend. Otter Tail has increased its dividend for 12 consecutive years.

Analyst Ratings

This is a breakdown of recent recommendations for Innergex Renewable Energy and Otter Tail, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Innergex Renewable Energy	0	2	0	0	2.00
Otter Tail	0	1	2	0	2.67

Otter Tail has a consensus target price of $83.00, indicating a potential downside of 6.91%. Given Otter Tail’s stronger consensus rating and higher possible upside, analysts plainly believe Otter Tail is more favorable than Innergex Renewable Energy.

Summary

Otter Tail beats Innergex Renewable Energy on 13 of the 17 factors compared between the two stocks.

About Innergex Renewable Energy

Innergex Renewable Energy Inc. operates as an independent renewable power producer in Canada, the United States, France, and Chile. It acquires, owns, develops, and operates renewable power-generating and energy storage facilities primarily in hydroelectric, wind, and solar power sectors. The company operates through three segments: Hydroelectric Power Generation, Wind Power Generation, and Solar Power Generation. As of February 21, 2024, it owned and operated 87 facilities with a net installed capacity of 3,600 megawatts, including 41 hydroelectric facilities, 35 wind facilities, 9 solar facilities, and 2 battery energy storage facilities. The company is headquartered in Longueuil, Canada.

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.