Shares of Otter Tail (OTTR -1.16%) jumped by as much as 14.8% in trading on Tuesday after the electric utility and manufacturing company reported its third-quarter financial results. Shares were still up 9.8% as of 3:00 p.m. ET.
Otter Tail's big quarter
Revenue was down 7% in the quarter to $358 million as plastics segment revenue dropped 10.7%. But net income jumped 9% to $92 million, or $2.19 per share, and even plastics net income was up 5.7%.
The better news was that management boosted its 2023 earnings guidance to a range of $6.76 per share to $6.96 per share, from a previous range of $5.70 per share to $6.00 per share.
Takeaways from the quarter
The electric business was down 8.7% on a revenue basis as there were fewer days when customers needed much heating or cooling -- what management describes as "unfavorable weather." Wholesale demand and prices also fell, impacting results.
But any reduction in revenue was met by lower costs for commodities and other inputs. That's helped the company's cost structure, and helped net income for the quarter. It's also worth noting that Otter Tail's pension contribution fell to zero because of the funding status in the quarter.
Otter Tail isn't going to impress growth investors with these results, but the company continues to churn out profits from the energy and industrial businesses. And given management's goal of growing earnings at a rate of 5% to 7% annually, this could be a slow and steady growth stock over the long term.
