Why On Track Innovations (OTIV) Stock Is Surging Today

NEW YORK (TheStreet) -- On Track Innovations  (OTIV) after Wired reported Apple's  (AAPL) iPhone 6 will contain near field communication radio that will support Apple's own mobile payment platform.

On Track Innovations works in cashless payment technology and offers mobile payments.

The stock was up 15.16% to $2.66 at 11:37 a.m. More than 1.1 million shares changed hands, compared to the average volume of 105,651.

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Separately, TheStreet Ratings team rates ON TRACK INNOVATIONS as a "sell" with a ratings score of E+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ON TRACK INNOVATIONS (OTIV) a SELL. This is based on the combination of unfavorable investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Computers & Peripherals industry average. The net income has decreased by 11.9% when compared to the same quarter one year ago, dropping from -$3.01 million to -$3.36 million.
  • Net operating cash flow has significantly decreased to -$3.89 million or 666.27% 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's earnings per share declined by 12.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ON TRACK INNOVATIONS continued to lose money by earning -$0.19 versus -$0.54 in the prior year. For the next year, the market is expecting a contraction of 47.4% in earnings (-$0.28 versus -$0.19).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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.
  • The gross profit margin for ON TRACK INNOVATIONS is rather high; currently it is at 56.35%. Regardless of OTIV's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OTIV's net profit margin of -64.71% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: OTIV Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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