A small regional power company might not sound exciting, but add in a wildly diverse range of additional operations, and you have Hidden Gems recommendation Otter Tail Power (NASDAQ:OTTR). The mini-conglomerate with the funny name is set to report earnings tonight, and the Fool is here to help you get a handle on what to expect.

What analysts say:

  • Buy, sell, or waffle? Four analysts follow Otter Tail, according to Capital IQ. One of them has issued a buy rating, while the other three rate the stock a hold.
  • Revenues. On average, analysts are looking for a 9% year-over-year improvement in sales, to $279.5 million.
  • Earnings. The average analyst forecast calls for $0.39 of quarterly GAAP profits, up from $0.37 a year ago.

What management says:
There's supposed to be some trouble with railroad delivery of coal to Otter Tail's coal-fired power plants this quarter. Other than that, the plastics and manufacturing divisions should do well, as long as the Midwest infrastructure building boom continues. Management remains upbeat about the outlook for fiscal 2006, thanks to some nice results in the first quarter and despite the expected coal issues.

What management does:
Steady as she goes, captain! With a backbone of electric utility sales and a plethora of other operations that tend to balance out each others' slumps and gains, Otter Tail can present a fabulously steady margin history. The even better news is that net margins are climbing back toward the 7% range they used to occupy five years ago. Management is running an increasingly tight ship here.

Margins %

12/04

3/05

6/05

9/05

12/05

3/06

Gross

25.2

25.2

25.0

25.6

25.4

25.3

Operating

8.8

9.0

9.1

10.0

9.5

9.7

Net

4.9

4.9

6.2

6.5

6.0

6.2
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Maybe coal won't be such a problem after all. Otter Tail's largest coal delivery supplier is Burlington Northern Santa Fe (NYSE:BNI), and that company just reported strong gains in the coal segment. That sounds like good news for Otter Tail shareholders, as the reduced full-year guidance that was issued on the back of these fears may be reversed tonight, if Burlington's results are any indication.

If you tune in to the conference call, expect to hear some discussion of alternative energy and whether coal-burning plants should be a part of the company's future plans. There are plans to build a large coal plant near the South Dakota-Minnesota border, in cooperation with six other power companies led by Great River Energy. State legislators in both states seem to like the plan, but environmental groups are protesting against using more carbon-dioxide-producing coal and advocating for wind power instead.

The plant has seen projected construction costs increase from $1 billion to $1.6 billion over the last month, making it even more controversial. Stay tuned for details on how the discussion pans out, and where that coal delivery issue ended up.

Competitors:

  • ALLETE Minnesota Power (NYSE:ALE)
  • Shaw Group (NYSE:SGR)
  • JM Smucker (NYSE:SJM)
  • Alliance Imaging (NYSE:AIQ)

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Fool contributor Anders Bylund thinks otters are cute, but doesn't own stock in any of the companies mentioned today. You can see for yourself , thanks to the Foolish disclosure rules .