ASX stock of the day: Over The Wire (ASX: OTW) shares bounce

The Over The Wire Holdings Ltd (ASX: OTW) share price is bouncing around today after climbing more than 8% after open this morning.

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The Over The Wire Holdings Ltd (ASX: OTW) share price is having an interesting day today. Over The Wire shares are, at the time of writing, up 4.77% to $4.61 a share after closing at $4.40 yesterday afternoon. However, soon after open, the Over The Wire share price rose as high as $4.81, up almost 9% for the day before settling down to the current level.

Today’s move is the latest in what has been a pretty good few months for this company. Over The Wire shares are now up almost 30% since early January, and up almost 54% over the past 12 months. 

So who is this company? And why are Over The Wire shares rising so healthily today?

Over the Who?

Over The Wire is an IT company that provides internet and telecommunications services. The company helps businesses efficiently integrate their technology and communications infrastructure. Its main client base is mid-to-large businesses and enterprises. It has been listed on the ASX since 2015, where it has since gained more than 250% in value.

Over The Wire offers a multitude of internet connectivity options for businesses, including fibre, NBN, mobile data and wireless solutions. It also offers cloud-based products like data storage, VoIP and private networks. The company works with some big-name clients, including names like Ray White, Foodworks and National Storage REIT (ASX: NSR).

Over The Wire impressed investors mightily back in February when it reported its earnings for the 6 months to 31 December 2020. This report included a 17% increase in revenues over the prior corresponding half. Earnings before interest, taxes, depreciation and amortisation (EBITDA) also rose by 28%, while net profits after tax before amortisation enjoyed a 12% bump.

Why are Over The Wire shares climbing today?

At first glance, it’s hard to say exactly why we are seeing significant buying pressure for the Over The Wire share price today. There have been no major announcements or news out of the company since Wednesday. And those were just some paperwork, including a release regarding the company’s recently announced dividend of 1.75 cents per share. 

Zooming out though, and we can see that Over The Wire has had a few pricing spikes over the past 6 months or so. For example, the company closed at the prices of $4.10, $4.44 and $4.17 over 11-15 March last month. Perhaps we are seeing a repeat performance today. Otherwise, the big move upwards this morning might be a result of some institutional buying pressure. Over The Wire is a relatively small company, so any large fund managers buying in would conceivably cause a share price spike. 

ASX trading data does show that roughly 44,000 shares traded hands both yesterday and today so far. That’s a significant increase on the ~2,200 shares that swapped hands on Wednesday.

Whatever the cause, I’m sure Over The Wire investors are a happy lot today. At the current Over The Wire share price, the company has a market capitalisation of $273.8 million, a price-to-earnings (P/E) ratio of 54.2, and a trailing dividend yield of 0.87%.

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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia has recommended Over The Wire Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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