Why On Track Innovations (OTIV) Is Soaring Today
BY Andrew Meola| 01/15/14 - 01:43 PM EST
NEW YORK (TheStreet) -- On Track Innovations (OTIV_) was soaring 17.44% to $4.31 on Wednesday after the company announced that it had received an initial purchase order for 10,000 Saturn 6500 readers.
The order comes from "a leading U.S.-based systems integrator serving the unattended point of sale market segment," according to a statement from the company. The order comes on the heels of On Track Innovations successful completion of its pilot program in December, when On Track Innovations started to deliver volume shipments of Saturn 6500 readers to the integrator for distribution to customers across the country.
On Track Innovations uses no-contact transactions and near-field communications to offer cashless payment solutions.
TheStreet Ratings team rates ON TRACK INNOVATIONS as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about its recommendation:
"We rate ON TRACK INNOVATIONS (OTIV) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Computers & Peripherals industry and the overall market, ON TRACK INNOVATIONS's return on equity significantly trails that of both the industry average and the S&P 500.
Net operating cash flow has significantly decreased to -$3.44 million or 77.77% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
ON TRACK INNOVATIONS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ON TRACK INNOVATIONS reported poor results of -$0.54 versus -$0.22 in the prior year.
The revenue fell significantly faster than the industry average of 2.8%. Since the same quarter one year prior, revenues fell by 27.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
Despite currently having a low debt-to-equity ratio of 0.45, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.82 is weak.
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