What is Otter Tail Corp worth?
With the base-case assumptions below, a discounted cash flow model on Otter Tail Corp's reported free cash flow gives $30.83 per share.
Inputs from the filings
Three sets of assumptions
| Case | Growth yrs 1-5 | Discount rate | Value per share | Value vs price |
|---|---|---|---|---|
| Bear | 3.0% | 10.0% | $11.09 | - |
| Base | 8.0% | 9.0% | $30.83 | - |
| Bull | 13.0% | 8.0% | $67.68 | - |
Sensitivity: base case value per share
| 1.5% | 2.0% | 2.5% | 3.0% | 3.5% | |
|---|---|---|---|---|---|
| 7.0% | $45.22 | $49.64 | $55.04 | $61.78 | $70.46 |
| 8.0% | $34.47 | $37.33 | $40.72 | $44.78 | $49.74 |
| 9.0% | $26.62 | $28.58 | $30.83 | $33.47 | $36.58 |
| 10.0% | $20.64 | $22.04 | $23.61 | $25.42 | $27.50 |
| 11.0% | $15.95 | $16.97 | $18.11 | $19.40 | $20.85 |
Where the presets come from
Base: years 1 to 5 grow at Otter Tail Corp's revenue growth rate over the last 5 fiscal years (7.9% a year), held between -5% and 15%. Years 6 to 10 grow halfway between that and the long-run rate of 2.5%. Future cash is discounted at 9% a year.
Bear: 5 points less growth, 2% long-run growth, 10% discount rate. Bull: 5 points more growth (at most 25%), 3% long-run growth, 8% discount rate.
Value per share = (present value of 10 years of free cash flow + present value of everything after + cash - debt) / diluted shares.
This is a model run on assumptions, not a recommendation or a price target. Small changes in the discount rate or growth move the result a lot, as the table above shows. Change them yourself in the calculator.
Adjust the assumptions
Move the sliders for growth, long-run growth and discount rate, or switch to average free cash flow, and see the value per share change.
Adjust the assumptions