Otter Tail Debt
| OTTR Stock | USD 78.45 0.68 0.86% |
Otter Tail holds a debt-to-equity ratio of 0.695. At this time, Otter Tail's Net Debt To EBITDA is relatively stable compared to the past year. As of 12/12/2024, Debt To Equity is likely to grow to 0.64, while Net Debt is likely to drop slightly above 470.2 M. . Otter Tail's financial risk is the risk to Otter Tail stockholders that is caused by an increase in debt.
Asset vs Debt
Equity vs Debt
Otter Tail's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Otter Tail's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Otter Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Otter Tail's stakeholders.
Otter Tail Quarterly Net Debt |
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For most companies, including Otter Tail, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Otter Tail, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Otter Tail's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 2.0031 | Book Value 39.049 | Operating Margin 0.3251 | Profit Margin 0.227 | Return On Assets 0.073 |
Given that Otter Tail's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Otter Tail is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Otter Tail to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Otter Tail is said to be less leveraged. If creditors hold a majority of Otter Tail's assets, the Company is said to be highly leveraged.
As of 12/12/2024, Total Current Liabilities is likely to drop to about 214.9 M. In addition to that, Liabilities And Stockholders Equity is likely to drop to about 1.7 BOtter |
Otter Tail Bond Ratings
Otter Tail financial ratings play a critical role in determining how much Otter Tail have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Otter Tail's borrowing costs.| Piotroski F Score | 8 | Strong | View |
| Beneish M Score | (2.98) | Unlikely Manipulator | View |
Otter Tail Debt to Cash Allocation
Many companies such as Otter Tail, eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
Otter Tail currently holds 905.48 M in liabilities with Debt to Equity (D/E) ratio of 0.7, which is about average as compared to similar companies. Otter Tail has a current ratio of 1.86, which is within standard range for the sector. Note, when we think about Otter Tail's use of debt, we should always consider it together with its cash and equity.Otter Tail Common Stock Shares Outstanding Over Time
Otter Tail Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Otter Tail uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.Otter Tail Debt Ratio | 32.0 |
Otter Tail Corporate Bonds Issued
Otter Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Otter Tail Use of Financial Leverage
Otter Tail's financial leverage ratio measures its total debt position, including all of its outstanding liabilities, and compares it to Otter Tail's current equity. If creditors own a majority of Otter Tail's assets, the company is considered highly leveraged. Understanding the composition and structure of Otter Tail's outstanding bonds gives an idea of how risky it is and if it is worth investing in.
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 905.5 M | 491.9 M | |
| Net Debt | 675.1 M | 470.2 M | |
| Short Term Debt | 81.4 M | 57.9 M | |
| Long Term Debt | 824.1 M | 494.1 M | |
| Long Term Debt Total | 947.4 M | 602.5 M | |
| Short and Long Term Debt | 81.4 M | 76.8 M | |
| Net Debt To EBITDA | 1.35 | 2.06 | |
| Debt To Equity | 0.63 | 0.64 | |
| Interest Debt Per Share | 22.64 | 23.77 | |
| Debt To Assets | 0.28 | 0.32 | |
| Long Term Debt To Capitalization | 0.36 | 0.33 | |
| Total Debt To Capitalization | 0.39 | 0.35 | |
| Debt Equity Ratio | 0.63 | 0.64 | |
| Debt Ratio | 0.28 | 0.32 | |
| Cash Flow To Debt Ratio | 0.45 | 0.24 |
Pair Trading with Otter Tail
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Otter Tail position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Otter Tail will appreciate offsetting losses from the drop in the long position's value.Moving against Otter Stock
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| 0.5 | ELP | Companhia Paranaense | PairCorr |
| 0.45 | BIP-PA | Brookfield Infrastructure | PairCorr |
| 0.45 | ED | Consolidated Edison | PairCorr |
The ability to find closely correlated positions to Otter Tail could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Otter Tail when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Otter Tail - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Otter Tail to buy it.
The correlation of Otter Tail is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Otter Tail moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Otter Tail moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Otter Tail can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Additional Tools for Otter Stock Analysis
When running Otter Tail's price analysis, check to measure Otter Tail's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Otter Tail is operating at the current time. Most of Otter Tail's value examination focuses on studying past and present price action to predict the probability of Otter Tail's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Otter Tail's price. Additionally, you may evaluate how the addition of Otter Tail to your portfolios can decrease your overall portfolio volatility.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.