Head-To-Head Review: CPFL Energia (CPL) vs. Otter Tail (OTTR)

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

Risk and Volatility

CPFL Energia has a beta of 1.31, indicating that its share price is 31% more volatile than the S&P 500. Comparatively, Otter Tail has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for CPFL Energia and Otter Tail, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CPFL Energia 0 0 0 0 N/A
Otter Tail 0 3 0 0 2.00

Otter Tail has a consensus price target of $41.00, indicating a potential downside of 0.24%. Given Otter Tail’s higher possible upside, analysts clearly believe Otter Tail is more favorable than CPFL Energia.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CPFL Energia $5.51 billion 1.07 $258.28 million $0.52 22.29
Otter Tail $803.54 million 2.02 $62.32 million $1.80 22.83

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.

Dividends

CPFL Energia pays an annual dividend of $0.12 per share and has a dividend yield of 1.0%. Otter Tail pays an annual dividend of $1.28 per share and has a dividend yield of 3.1%. CPFL Energia pays out 23.1% of its earnings in the form of a dividend. Otter Tail pays out 71.1% 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. CPFL Energia has increased its dividend for 4 consecutive years.

Institutional & Insider Ownership

1.8% of CPFL Energia shares are owned by institutional investors. Comparatively, 41.0% of Otter Tail shares are owned by institutional investors. 1.4% of Otter Tail shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
CPFL Energia 3.48% 8.18% 2.09%
Otter Tail 8.21% 10.34% 3.65%

Summary

Otter Tail beats CPFL Energia on 10 of the 15 factors compared between the two stocks.

About CPFL Energia

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.

About Otter Tail

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.

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