ASX:OTW

Stock Analysis Report

Over the Wire Holdings

Executive Summary

Over the Wire Holdings Limited provides data network and Internet, voice, cloud and managed, and data center co-location services in Australia and New Zealand.


Snowflake Analysis

Undervalued with solid track record.


Similar Companies

Share Price & News

How has Over the Wire Holdings's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: OTW's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-26.6%

OTW

-1.2%

AU IT

0.7%

AU Market


1 Year Return

-35.0%

OTW

32.5%

AU IT

15.5%

AU Market

Return vs Industry: OTW underperformed the Australian IT industry which returned 32.5% over the past year.

Return vs Market: OTW underperformed the Australian Market which returned 15.5% over the past year.


Shareholder returns

OTWIndustryMarket
7 Day-26.6%-1.2%0.7%
30 Day-27.8%4.2%0.8%
90 Day-30.7%12.7%6.1%
1 Year-34.5%-35.0%34.9%32.5%20.6%15.5%
3 Year32.1%29.0%63.2%49.5%38.1%19.7%
5 Yearn/a117.4%91.7%51.8%17.9%

Price Volatility Vs. Market

How volatile is Over the Wire Holdings's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Over the Wire Holdings undervalued compared to its fair value and its price relative to the market?

45.6%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: OTW (A$3.25) is trading below our estimate of fair value (A$5.97)

Significantly Below Fair Value: OTW is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: OTW is good value based on its PE Ratio (18.1x) compared to the IT industry average (22.4x).

PE vs Market: OTW is good value based on its PE Ratio (18.1x) compared to the Australian market (18.6x).


Price to Earnings Growth Ratio

PEG Ratio: OTW is good value based on its PEG Ratio (0.9x)


Price to Book Ratio

PB vs Industry: OTW is overvalued based on its PB Ratio (2.5x) compared to the AU IT industry average (2.5x).


Next Steps

Future Growth

How is Over the Wire Holdings forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

21.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: OTW's forecast earnings growth (21.1% per year) is above the savings rate (1.1%).

Earnings vs Market: OTW's earnings (21.1% per year) are forecast to grow faster than the Australian market (9.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: OTW's revenue (11.5% per year) is forecast to grow faster than the Australian market (4.1% per year).

High Growth Revenue: OTW's revenue (11.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: OTW's Return on Equity is forecast to be low in 3 years time (15%).


Next Steps

Past Performance

How has Over the Wire Holdings performed over the past 5 years?

35.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: OTW has high quality earnings.

Growing Profit Margin: OTW's current net profit margins (10.5%) are higher than last year (10.2%).


Past Earnings Growth Analysis

Earnings Trend: OTW's earnings have grown significantly by 35.7% per year over the past 5 years.

Accelerating Growth: OTW's earnings growth over the past year (42%) exceeds its 5-year average (35.7% per year).

Earnings vs Industry: OTW earnings growth over the past year (42%) exceeded the IT industry 27.7%.


Return on Equity

High ROE: OTW's Return on Equity (13.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Over the Wire Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: OTW's short term assets (A$20.5M) exceed its short term liabilities (A$20.1M).

Long Term Liabilities: OTW's short term assets (A$20.5M) exceed its long term liabilities (A$16.4M).


Debt to Equity History and Analysis

Debt Level: OTW's debt to equity ratio (11.1%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if OTW's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: OTW's debt is well covered by operating cash flow (138.1%).

Interest Coverage: OTW's interest payments on its debt are well covered by EBIT (34.8x coverage).


Balance Sheet

Inventory Level: OTW has a low level of unsold assets or inventory.

Debt Coverage by Assets: OTW's debt is covered by short term assets (assets are 2.8x debt).


Next Steps

Dividend

What is Over the Wire Holdings's current dividend yield, its reliability and sustainability?

1.00%

Current Dividend Yield


Dividend Yield vs Market

company1.0%marketbottom25%2.3%markettop25%5.4%industryaverage2.3%forecastin3Years1.3%

Current dividend yield vs market & industry

Notable Dividend: OTW's dividend (1%) isn’t notable compared to the bottom 25% of dividend payers in the Australian market (2.3%).

High Dividend: OTW's dividend (1%) is low compared to the top 25% of dividend payers in the Australian market (5.35%).


Stability and Growth of Payments

Stable Dividend: OTW is not paying a notable dividend for the Australian market, therefore no need to check if payments are stable.

Growing Dividend: OTW is not paying a notable dividend for the Australian market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: OTW is not paying a notable dividend for the Australian market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of OTW's dividend in 3 years as they are not forecast to pay a notable one for the Australian market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

6.4yrs

Average board tenure


CEO

Michael Omeros 0

8.6yrs

Tenure

AU$353,666

Compensation

Mr. Michael Nictarios Omeros, MAICD, BE(Electronics)(Hons), BInfoTech, co-founded Over the Wire Holdings Limited and has been its Chief Executive Officer, Managing Director and Director since July 01, 2011 ...


CEO Compensation Analysis

Compensation vs Market: Michael's total compensation ($USD0.00) is below average for companies of similar size in the Australian market ($USD253.04K).

Compensation vs Earnings: Michael's compensation has been consistent with company performance over the past year.


Board Members

NamePositionTenureCompensationOwnership
Michael Omeros
MD, CEO & Director8.6yrsAU$353.67k25.12% A$42.2m
Brent Paddon
Executive Director8.6yrsAU$297.86k22.27% A$37.4m
John Puttick
Non-Executive Chairman4.2yrsAU$85.00k0.24% A$397.4k
Susan Forrester
Non-Executive Director4.2yrsAU$60.00k0.35% A$582.4k

6.4yrs

Average Tenure

Experienced Board: OTW's board of directors are considered experienced (6.4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: OTW insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 13.9%.


Top Shareholders

Company Information

Over the Wire Holdings Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Over the Wire Holdings Limited
  • Ticker: OTW
  • Exchange: ASX
  • Founded: 2005
  • Industry: Internet Services and Infrastructure
  • Sector: Software
  • Market Cap: AU$167.830m
  • Shares outstanding: 51.64m
  • Website: https://www.overthewire.com.au

Location

  • Over the Wire Holdings Limited
  • 100 Creek Street
  • Level 24
  • Brisbane
  • Queensland
  • 4000
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
OTWASX (Australian Securities Exchange)YesOrdinary SharesAUAUDDec 2015
OTWCHIA (Chi-X Australia)YesOrdinary SharesAUAUDDec 2015

Biography

Over the Wire Holdings Limited provides data network and Internet, voice, cloud and managed, and data center co-location services in Australia and New Zealand. The company offers Internet connectivity services to enable Internet services, video conferencing, Software as a Service applications, and online collaboration for various businesses. It also provides Session Initiation Protocol based Internet voice solutions; and operates a platform that supports various client usage scenarios, from Private Branch exchanges (PBX) to call center dialers, for inbound and outbound calling. In addition, the company offers a range of private cloud-based services consisting of Infrastructure as a Service, hosted PBX, and managed services. Further, it allows customers to house their equipment, such as servers and network equipment. The company was founded in 2005 and is headquartered in Brisbane, Australia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/21 10:52
End of Day Share Price2020/02/21 00:00
Earnings2019/12/31
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.