Why On Track Innovations (OTIV) Stock Is Up Today

NEW YORK (TheStreet) -- Shares of On Track Innovations  (OTIV) rose 9.21% to $4.15 in morning trading Monday after Apple  (AAPL) announced a record four million pre-orders for the upcoming iPhone 6 and iPhone 6 Plus in the first 24 hours.

The iPhone 6 and iPhone 6 Plus will feature Apple Pay, the company's own version of a mobile wallet. Cashless payment and near field communication (NFC) companies, including On Track Innovations, received a stock boost in the wake of the announcement.

Last week, On Track Innovations announced it would bring add-on devices for Apple's iPhone 4, 4s, 5, 5s and iPad devices.

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On Track Innovations said it was working with banks and mobile network operators to bring its new WAVE and NFC Insert mobile devices to the Apple products. The company said the WAVE, which plugs into the audio jack on the devices, has already received certification from major payment companies that include Visa (V)  and MasterCard (MA) .

"Apple's launch of the NFC-enabled iPhone 6, iPhone 6 Plus and Apple Watch yesterday provided a tremendous boost to the increasing wide-scale adoption of NFC technology," the company said in a statement.

More than 9.6 million shares had changed hands, compared to the average volume of 1,036,310.

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

"We rate ON TRACK INNOVATIONS (OTIV) a SELL. This is driven by some concerns, 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 area that we feel has been the company's primary weakness has been its feeble growth in its earnings per share."

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

  • 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 50.66%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, OTIV's net profit margin of -31.01% significantly underperformed when compared to the industry average.
  • ON TRACK INNOVATIONS has improved earnings per share by 12.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ON TRACK INNOVATIONS continued to lose money by earning -$0.21 versus -$0.54 in the prior year. For the next year, the market is expecting a contraction of 33.3% in earnings (-$0.28 versus -$0.21).
  • Despite currently having a low debt-to-equity ratio of 0.51, 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 1.15 is sturdy.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Computers & Peripherals industry average. The net income increased by 2.4% when compared to the same quarter one year prior, going from -$2.27 million to -$2.22 million.
  • You can view the full analysis from the report here: OTIV Ratings Report

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