Value
6.3/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 6.6 |
| P/S | 8.4 |
| EV/EBITDA | 5.5 |
| Fwd P/E | 7.3 |
| PEG | 4.5 |
- ▸Forward P/E: 17.0x
- ▸PEG: 2.01
OTTR · Why this verdict
Why Otter Tail (OTTR) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictBUY WAIT
Overall score5.2/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Otter Tail has broken out technically with a golden cross and all moving averages in alignment, but analyst price targets have already been reached, the stock sits 3.8% from its 52-week high, and high short interest of 18% creates a squeeze risk that could accelerate either a sharp move up or a reversal.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Otter Tail completed a golden cross with the stock above all key moving averages, RSI at 52 with bullish MACD, and rising on-balance volume — the strongest technical alignment in this dataset. V9 | Price holds above the 200-day moving average and the stock stays above $85 for at least 3 consecutive months. | →Stable |
| CounterThe stock is 3.8% from its 52-week high with analyst targets already reached; late-cycle breakouts in small-cap industrials frequently reverse once resistance is hit at recent highs. | ||
Short interest stands at 18% of float with a short squeeze quality score of 7.5, creating the potential for a rapid forced covering event if prices advance through technical resistance. Risk breakdown | Short interest falls below 12% within 6 months as short sellers cover, contributing to price appreciation. | →Stable |
| CounterHigh short interest often reflects informed bearish research on fundamentals; the short position at 18% may reflect structural concerns about the Coyote Station coal counterparty that are not yet visible in earnings. | ||
While Piotroski F-Score is a perfect 9 out of 9, free cash flow is negative 26% relative to net income, signaling that reported earnings are materially outpacing actual cash generation. Quality breakdown | Free cash flow as a percentage of net income improves to above 50% within 4 reporting periods as capital expenditures normalize. | →Stable |
| CounterHeavy capital investment periods at utilities frequently suppress near-term free cash flow; the negative conversion may reflect rate-base expansion rather than earnings quality decay. | ||
Analyst earnings estimates have declined 37.3% over the past 30 days, the steepest downward revision in the dataset, despite the recent earnings beat, suggesting analysts expect conditions to worsen. Catalyst breakdown | Consensus earnings estimates stabilize or return to positive revision territory within 2 quarters. | →Stable |
| CounterLarge estimate revisions can overshoot in both directions; the 37.3% decline may already be fully priced in after the most recent quarter's 21.8% earnings beat. | ||
Otter Tail completed a golden cross with the stock above all key moving averages, RSI at 52 with bullish MACD, and rising on-balance volume — the strongest technical alignment in this dataset.
→StableV9
- Expectation
- Price holds above the 200-day moving average and the stock stays above $85 for at least 3 consecutive months.
CounterThe stock is 3.8% from its 52-week high with analyst targets already reached; late-cycle breakouts in small-cap industrials frequently reverse once resistance is hit at recent highs.
Short interest stands at 18% of float with a short squeeze quality score of 7.5, creating the potential for a rapid forced covering event if prices advance through technical resistance.
→StableRisk breakdown
- Expectation
- Short interest falls below 12% within 6 months as short sellers cover, contributing to price appreciation.
CounterHigh short interest often reflects informed bearish research on fundamentals; the short position at 18% may reflect structural concerns about the Coyote Station coal counterparty that are not yet visible in earnings.
While Piotroski F-Score is a perfect 9 out of 9, free cash flow is negative 26% relative to net income, signaling that reported earnings are materially outpacing actual cash generation.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income improves to above 50% within 4 reporting periods as capital expenditures normalize.
CounterHeavy capital investment periods at utilities frequently suppress near-term free cash flow; the negative conversion may reflect rate-base expansion rather than earnings quality decay.
Analyst earnings estimates have declined 37.3% over the past 30 days, the steepest downward revision in the dataset, despite the recent earnings beat, suggesting analysts expect conditions to worsen.
→StableCatalyst breakdown
- Expectation
- Consensus earnings estimates stabilize or return to positive revision territory within 2 quarters.
CounterLarge estimate revisions can overshoot in both directions; the 37.3% decline may already be fully priced in after the most recent quarter's 21.8% earnings beat.
Per-dimension breakdown
Quality
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.6 |
| ROA | 3.4 |
| Gross margin | 4.4 |
| Op margin | 9.6 |
| Net margin | 7.4 |
| Current ratio | 6.1 |
| FCF quality | 0.0 |
| Moat | 5.2 |
| Piotroski F | 10.0 |
- ▸Earnings quality RED FLAG: -85% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 9/9
Growth
2.6/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 2.6 |
Momentum
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 9.2 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 3.5 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.0 |
| erm sentiment | 5.9 |
Insider
6.1/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.2 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $394,044 (0.010% of mkt cap)
Peer rank
3.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.4 |
| quality rank | 5.3 |
| growth rank | 2.7 |
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.1 |
| support resistance | 1.3 |
| 52w position | 9.1 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.9 |
| days to cover | 0.0 |
| volatility | 8.9 |
| put call | 10.0 |
| implied vol | 5.5 |
| beta | 10.0 |
| debt equity | 7.0 |
- ▸High short interest: 16%
- ▸Concentration risks: 1 HIGH, 3 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 6.1 |
| dividend safety | 5.3 |
- ▸Earnings concerns: 2B/2M
- ▸Earnings in 3 days
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Earnings in 3 days. Wait until post-earnings.
Engine technical detail
verdict_path:
L3:NEWS_BLOCK|ENTRY_STICKY:WITHIN_BANDPassed (5)
- MOMENTUM:7.3>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-3.0=NEGATIVE
- EARNINGS_PROXIMITY:3d<=7d
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-2.98
Upside
-14.9%
Downside
5.0%
Sizing output
STARTER
SetupBreakout — Golden cross, above all MAs, RSI 67, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $3.8B<$5B
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: Earnings in 3 days. Wait until post-earnings. The 10-dimension scores remain Momentum at 7.3 (strongest), but ASYMMETRY:-3.0=NEGATIVE also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Momentum at 7.3, Value at 6.3, and Risk (lower is worse) at 6.2; the weakest are Growth at 2.6, Peer rank at 3.9, and Technical at 4.2. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -2.98 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Technical Breakout Momentum
Trip ifPrice drops below the 200-day moving average and stays below it for more than 20 trading days.
- P2High Short Interest Squeeze Risk
Trip ifShort interest rises above 22% of float.
- P3Earnings Quality Red Flag
Trip ifFree cash flow remains below negative 40% of net income for 2 consecutive quarters.
- P4Analyst Estimate Deterioration
Trip ifConsensus earnings estimates decline by more than 50% over any 60-day rolling period.