Head to Head Comparison: Otter Tail (OTTR) vs. CPFL Energia (CPL)

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

Insider & Institutional Ownership

41.0% of Otter Tail shares are owned by institutional investors. Comparatively, 1.8% of CPFL Energia shares are owned by institutional investors. 1.4% of Otter Tail shares are owned 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.

Valuation and Earnings

This table compares Otter Tail and CPFL Energia’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Otter Tail $803.54 million 2.16 $62.32 million $1.80 24.33
CPFL Energia $5.51 billion 1.09 $258.28 million $0.53 22.26

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

Profitability

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

Net Margins Return on Equity Return on Assets
Otter Tail 8.53% 10.47% 3.68%
CPFL Energia 3.48% 8.18% 2.09%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Otter Tail and CPFL Energia, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Otter Tail 0 2 1 0 2.33
CPFL Energia 0 0 0 0 N/A

Otter Tail presently has a consensus price target of $41.00, indicating a potential downside of 6.39%. Given Otter Tail’s higher probable upside, equities analysts clearly believe Otter Tail is more favorable than CPFL Energia.

Risk and Volatility

Otter Tail has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, CPFL Energia has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500.

Dividends

Otter Tail pays an annual dividend of $1.28 per share and has a dividend yield of 2.9%. CPFL Energia pays an annual dividend of $0.12 per share and has a dividend yield of 1.0%. Otter Tail pays out 71.1% of its earnings in the form of a dividend. CPFL Energia pays out 22.6% 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 increased its dividend for 3 consecutive years. Otter Tail is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Otter Tail beats CPFL Energia on 12 of the 16 factors compared between the two stocks.

Otter Tail Company Profile

Otter Tail Corporation is a holding company. The Company operates through three segments: Electric, Manufacturing and Plastics. The Electric segment includes the production, transmission, distribution and sale of electric energy in Minnesota, North Dakota and South Dakota by Otter Tail Power Company (OTP). The Manufacturing segment consists of businesses in manufacturing activities, such as contract machining, metal parts stamping, fabrication and painting, and production of material and handling trays and horticultural containers. These businesses have manufacturing facilities in Georgia, Illinois and Minnesota and sell products primarily in the United States. The Plastics segment consists of businesses producing polyvinyl chloride (PVC) pipe at plants in North Dakota and Arizona. The PVC pipe is sold primarily in the upper Midwest and Southwest regions of the United States. The Company’s manufacturing and plastic pipe businesses are owned by its subsidiary, Varistar Corporation.

CPFL Energia Company Profile

CPFL Energia S.A. is a holding company. The Company, through its subsidiaries, distributes, generates, transmits and commercializes electricity in Brazil, as well as provides energy-related services. Its segments include Distribution, Conventional Generation Sources, Renewable Energy Generation, Commercialization and Services. The Company operates its distribution segment through its eight distributors. Its installed capacity in conventional generation is approximately 2,200 megawatt (MW). The Company, through its subsidiary CPFL Geracao, holds equity interests in eight Hydroelectric Power Plants. It operates in the segment of generation of energy of renewable sources, such as wind, biomass thermal plants, SHPPs and solar, through its subsidiary, CPFL Renovaveis. The Company operates in the segment of commercialization (power competitive supply) through its subsidiary, CPFL Brasil. The Company operates in the segment of value-added services providing electricity-related services.

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