Abstract

Otter Tail Corporation will report its fourth-quarter results on February 16, 2026 Post Market; this preview compiles last quarter’s performance, segment dynamics, and the latest forecasts for revenue, margins, net profit, and adjusted EPS alongside recent analyst sentiment.

Market Forecast

Market models for the upcoming quarter point to revenue of $311.15 million, implying a forecast year-over-year change of -1.15%, with EBIT estimated at $77.15 million and forecast EPS of $1.32. Year-over-year forecast growth for EPS is 3.99%, while EBIT is implied to be broadly flat at 1.11%. The company’s last reported outlook frames a stable margin profile; where available, consensus implies a steady gross profit margin and a roughly stable net profit margin, with adjusted EPS expected to edge up modestly year over year. Management’s businesses remain anchored by its regulated electric utility and two manufacturing operations, with the utility as the primary earnings driver and diversified manufacturing providing cyclical balance. The most promising segment near term remains the utility business given its regulated returns and rate base investment cycle, while manufacturing revenue offers optionality into demand normalization.

Last Quarter Review

In the previous quarter, Otter Tail Corporation reported revenue of $325.56 million, a gross profit margin of 45.55%, GAAP net profit attributable to shareholders of $78.29 million, a net profit margin of 24.05%, and adjusted EPS of $1.86, with revenue down 3.69% year over year and adjusted EPS down 8.37% year over year. A key highlight was resilient profitability despite lower sales, with net margin maintained above 24.00% and gross margin at 45.55%, underscoring strong cost control and favorable mix. By main businesses, revenue was driven by Electric at $138.60 million, Plastics at $110.02 million, and Manufacturing at $76.95 million.

Current Quarter Outlook (with major analytical insights)

Electric Utility: Margin resilience and regulated earnings underpin guidance

The regulated electric utility is positioned to anchor this quarter’s earnings trajectory through rate base growth and cost pass-through mechanisms that support stable returns. Forecast revenue of $311.15 million for the consolidated company, coupled with an EBIT estimate of $77.15 million, indicates a margin mix that remains supportive of earnings quality. With the prior quarter’s gross margin at 45.55% and net margin at 24.05%, we expect the utility’s structurally higher margin characteristics to again provide downside protection if top-line trends soften. Near-term variability could come from fuel and purchased power costs, yet the regulated framework typically allows recovery over time. Weather normalization and load factors are likely to be neutral to modestly positive relative to the prior year, and service-territory industrial activity will be a swing factor for kilowatt-hour sales. The cadence of capital spending on grid and generation assets continues to set up incremental earnings accretion, but timing of rate filings versus in-service dates may cause quarter-to-quarter lumpiness.

Plastics and Manufacturing: Demand normalization and pricing reset shape volume/margin trade-off

Plastics and broader manufacturing revenues together accounted for $186.97 million last quarter ($110.02 million in Plastics and $76.95 million in Manufacturing). Sequentially, these segments tend to reflect broader industrial and construction cycles, with backlogs and channel inventories influencing shipment timing. The current-quarter revenue forecast implies a consolidated step down from last quarter’s $325.56 million to $311.15 million, which likely reflects a softer seasonal run-rate and a cautious view on industrial orders. Pricing in plastics has been normalizing after previous spikes tied to resin constraints, and the company’s focus remains on protecting contribution margins through cost discipline and selective mix management. Operating leverage may be less supportive on lower volumes, but a leaner cost base and productivity initiatives should help mitigate margin pressure. Should resin prices or freight costs move favorably, segment margins could see tactical improvement even if unit volumes are subdued.

Key Stock Price Driver: EPS trajectory versus stable margins

The central stock catalyst into the print is whether adjusted EPS of $1.32 can outpace the modest 3.99% year-over-year growth implied by forecasts, especially with EBIT growth forecast at only 1.11%. If margins remain near prior-quarter levels, incremental upside would need to come from mix, lower input costs, or opex efficiencies. Conversely, if utility load is weak or if plastics/manufacturing utilization dips more than expected, EBIT slippage could pressure EPS despite margin resilience at the utility. Investors will parse management’s qualitative commentary on 2026 demand in end markets tied to construction, infrastructure, and industrial customers, as well as any updates on capital expenditure and the timing of regulatory recovery that could affect forward EPS cadence. Balance-sheet flexibility and cash conversion from the utility and manufacturing operations also remain relevant for dividend capacity and organic reinvestment, which can support valuation through the cycle.

Analyst Opinions

Recent published views over the past six months skew neutral-to-cautious, with a majority of analysts maintaining Hold or Market Perform stances and few explicit upgrades ahead of the quarter. Institutions highlight a balanced setup: supportive regulated returns are countered by mixed read-throughs from industrial indicators impacting plastics and manufacturing. The majority view emphasizes limited valuation re-rating catalysts in the near term unless earnings visibility improves, particularly around non-utility demand normalization and the pace of utility rate recovery. This perspective suggests investors are likely to look for confirmation that the company can sustain mid-40.00% gross margins and mid-20.00% net margins while progressing on its investment plan, which would underpin stable-to-gradual EPS growth through 2026.