Orbit Technologies Ltd provides airborne communications, and satellite-tracking maritime and ground-station solutions in Israel and internationally. It provides audio management systems; business aviation, airborne, maritime, and land mobile SATCOM products; telemetry and tracking, and land and airborne audio management systems. The company was incorporated in 1950 and is headquartered in Netanya, Israel.

Israel

Orbit Technologies Ltd

Industrials

The company pays dividends on rare occasions. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. The company distributes nearly all its profit as dividends (payout ratio above 90%, a negative factor). It will not be easy to sustain such an extreme payout ratio. It may also indicate a company's lack of profitable growth opportunities, which suggests doubtful prospects. 

ORBI.TA reported revenue of USD 70mn in the last 12 months, up 11% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 16% from FY23 to USD 0.47.

The stock has been growing steadily in the past six months, adding 39% in total. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 7ppts over past six months and grown 13ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 24.9% in the last 12 months, a decline from 25.4% in FY23. 

Historically, ORBI.TA has reported strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 16.8%, a growth from 15.6% in FY23. 

Orbit Technologies Ltd reported a return on equity (RoE) of 14.8% in the last 12 months, up from 13.2% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 9.8% in the last 12 months, an increase from 8.7% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 12.8%, above the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.3 in the past several years. This ratio implies a strong shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

ORBI.TA has average trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually stable and remains extremely favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is minimal. We note robust profitability, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to slow historical revenue growth, poor working capital management.

In highly turbulent market conditions, ORBI.TA is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, ORBI.TA is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from low to substantial. 

Based on key historical and expected multiples, the stock is greatly undervalued relative to its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, undervalued on P/FCF. 

Orbit Technologies Ltd

ILA 4279

5

Orbit Technologies Ltd

ILA 4279

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

ILA 4279

About

About

About

About