Intrinsic value of Orion Group Holdings - ORN

Previous Close

$4.22

  Intrinsic Value

$1.24

stock screener

  Rating & Target

str. sell

-71%

Previous close

$4.22

 
Intrinsic value

$1.24

 
Up/down potential

-71%

 
Rating

str. sell

We calculate the intrinsic value of ORN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.30
  15.17
  14.15
  13.24
  12.41
  11.67
  11.01
  10.40
  9.86
  9.38
  8.94
  8.55
  8.19
  7.87
  7.59
  7.33
  7.09
  6.88
  6.70
  6.53
  6.37
  6.24
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
Revenue, $m
  673
  775
  885
  1,002
  1,126
  1,257
  1,396
  1,541
  1,693
  1,852
  2,017
  2,190
  2,369
  2,556
  2,750
  2,951
  3,160
  3,378
  3,604
  3,839
  4,084
  4,339
  4,604
  4,880
  5,168
  5,469
  5,782
  6,109
  6,451
  6,808
Variable operating expenses, $m
  667
  767
  874
  988
  1,110
  1,238
  1,374
  1,516
  1,664
  1,820
  1,973
  2,141
  2,317
  2,499
  2,689
  2,886
  3,090
  3,303
  3,524
  3,754
  3,994
  4,243
  4,502
  4,772
  5,054
  5,348
  5,654
  5,974
  6,308
  6,657
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  667
  767
  874
  988
  1,110
  1,238
  1,374
  1,516
  1,664
  1,820
  1,973
  2,141
  2,317
  2,499
  2,689
  2,886
  3,090
  3,303
  3,524
  3,754
  3,994
  4,243
  4,502
  4,772
  5,054
  5,348
  5,654
  5,974
  6,308
  6,657
Operating income, $m
  6
  8
  11
  13
  16
  19
  22
  25
  29
  32
  45
  49
  52
  57
  61
  65
  70
  75
  80
  85
  90
  96
  102
  108
  114
  121
  128
  135
  143
  151
EBITDA, $m
  43
  50
  57
  64
  72
  80
  89
  99
  108
  119
  129
  140
  152
  164
  176
  189
  202
  216
  231
  246
  261
  278
  295
  312
  331
  350
  370
  391
  413
  436
Interest expense (income), $m
  5
  5
  7
  9
  12
  14
  17
  20
  23
  26
  29
  32
  36
  40
  43
  47
  51
  56
  60
  65
  70
  75
  80
  85
  91
  97
  103
  109
  116
  123
  130
Earnings before tax, $m
  1
  1
  1
  2
  2
  2
  2
  3
  3
  3
  12
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  17
  17
  18
  18
  19
  19
  20
  21
Tax expense, $m
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  6
Net income, $m
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  12
  12
  12
  13
  13
  13
  14
  14
  15
  15

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  504
  580
  662
  750
  843
  941
  1,045
  1,154
  1,267
  1,386
  1,510
  1,639
  1,773
  1,913
  2,058
  2,209
  2,366
  2,528
  2,698
  2,874
  3,057
  3,248
  3,446
  3,653
  3,869
  4,093
  4,328
  4,573
  4,829
  5,096
Adjusted assets (=assets-cash), $m
  504
  580
  662
  750
  843
  941
  1,045
  1,154
  1,267
  1,386
  1,510
  1,639
  1,773
  1,913
  2,058
  2,209
  2,366
  2,528
  2,698
  2,874
  3,057
  3,248
  3,446
  3,653
  3,869
  4,093
  4,328
  4,573
  4,829
  5,096
Revenue / Adjusted assets
  1.335
  1.336
  1.337
  1.336
  1.336
  1.336
  1.336
  1.335
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
  1.336
Average production assets, $m
  228
  263
  300
  340
  382
  426
  473
  522
  574
  628
  684
  742
  803
  866
  932
  1,000
  1,071
  1,145
  1,222
  1,302
  1,385
  1,471
  1,561
  1,654
  1,752
  1,854
  1,960
  2,071
  2,187
  2,308
Working capital, $m
  97
  112
  127
  144
  162
  181
  201
  222
  244
  267
  291
  315
  341
  368
  396
  425
  455
  486
  519
  553
  588
  625
  663
  703
  744
  788
  833
  880
  929
  980
Total debt, $m
  119
  154
  192
  233
  277
  323
  371
  421
  474
  530
  588
  648
  710
  775
  843
  913
  986
  1,062
  1,141
  1,223
  1,309
  1,397
  1,490
  1,586
  1,687
  1,791
  1,901
  2,015
  2,134
  2,258
Total liabilities, $m
  235
  270
  309
  349
  393
  439
  487
  538
  591
  646
  704
  764
  826
  891
  959
  1,029
  1,102
  1,178
  1,257
  1,339
  1,425
  1,513
  1,606
  1,702
  1,803
  1,908
  2,017
  2,131
  2,250
  2,375
Total equity, $m
  269
  310
  354
  400
  450
  503
  558
  616
  677
  740
  806
  875
  947
  1,022
  1,099
  1,180
  1,263
  1,350
  1,441
  1,535
  1,632
  1,734
  1,840
  1,951
  2,066
  2,186
  2,311
  2,442
  2,578
  2,721
Total liabilities and equity, $m
  504
  580
  663
  749
  843
  942
  1,045
  1,154
  1,268
  1,386
  1,510
  1,639
  1,773
  1,913
  2,058
  2,209
  2,365
  2,528
  2,698
  2,874
  3,057
  3,247
  3,446
  3,653
  3,869
  4,094
  4,328
  4,573
  4,828
  5,096
Debt-to-equity ratio
  0.440
  0.500
  0.540
  0.580
  0.610
  0.640
  0.660
  0.680
  0.700
  0.720
  0.730
  0.740
  0.750
  0.760
  0.770
  0.770
  0.780
  0.790
  0.790
  0.800
  0.800
  0.810
  0.810
  0.810
  0.820
  0.820
  0.820
  0.830
  0.830
  0.830
Adjusted equity ratio
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  12
  12
  12
  13
  13
  13
  14
  14
  15
  15
Depreciation, amort., depletion, $m
  37
  41
  46
  51
  56
  61
  67
  73
  80
  86
  84
  92
  99
  107
  115
  124
  132
  141
  151
  161
  171
  182
  193
  204
  216
  229
  242
  256
  270
  285
Funds from operations, $m
  38
  42
  47
  52
  57
  63
  69
  75
  82
  89
  93
  101
  109
  117
  125
  134
  143
  152
  162
  172
  183
  193
  205
  217
  229
  242
  256
  270
  285
  300
Change in working capital, $m
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  51
Cash from operations, $m
  24
  27
  31
  35
  39
  44
  49
  54
  60
  66
  70
  76
  83
  90
  97
  105
  113
  121
  129
  138
  147
  157
  167
  177
  188
  199
  211
  223
  235
  249
Maintenance CAPEX, $m
  -24
  -28
  -32
  -37
  -42
  -47
  -53
  -58
  -64
  -71
  -78
  -84
  -92
  -99
  -107
  -115
  -124
  -132
  -141
  -151
  -161
  -171
  -182
  -193
  -204
  -216
  -229
  -242
  -256
  -270
New CAPEX, $m
  -32
  -35
  -37
  -40
  -42
  -45
  -47
  -49
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -68
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -94
  -98
  -102
  -106
  -111
  -116
  -121
Cash from investing activities, $m
  -56
  -63
  -69
  -77
  -84
  -92
  -100
  -107
  -116
  -125
  -134
  -142
  -153
  -162
  -173
  -183
  -195
  -206
  -218
  -231
  -244
  -257
  -272
  -287
  -302
  -318
  -335
  -353
  -372
  -391
Free cash flow, $m
  -32
  -35
  -39
  -42
  -45
  -48
  -50
  -53
  -56
  -59
  -64
  -67
  -70
  -73
  -76
  -79
  -82
  -85
  -89
  -92
  -96
  -100
  -105
  -109
  -114
  -119
  -125
  -130
  -136
  -142
Issuance/(repayment) of debt, $m
  33
  36
  38
  41
  43
  46
  48
  51
  53
  55
  58
  60
  63
  65
  68
  70
  73
  76
  79
  82
  85
  89
  93
  96
  100
  105
  109
  114
  119
  124
Issuance/(repurchase) of shares, $m
  37
  40
  43
  46
  48
  51
  54
  56
  59
  61
  57
  60
  62
  65
  68
  70
  73
  76
  79
  83
  86
  90
  94
  98
  102
  107
  112
  117
  122
  128
Cash from financing (excl. dividends), $m  
  70
  76
  81
  87
  91
  97
  102
  107
  112
  116
  115
  120
  125
  130
  136
  140
  146
  152
  158
  165
  171
  179
  187
  194
  202
  212
  221
  231
  241
  252
Total cash flow (excl. dividends), $m
  38
  40
  42
  45
  47
  49
  51
  53
  55
  58
  51
  53
  55
  57
  60
  62
  64
  67
  70
  72
  75
  78
  82
  85
  89
  92
  96
  101
  105
  110
Retained Cash Flow (-), $m
  -38
  -41
  -44
  -47
  -50
  -53
  -55
  -58
  -61
  -63
  -66
  -69
  -72
  -75
  -77
  -81
  -84
  -87
  -90
  -94
  -98
  -102
  -106
  -110
  -115
  -120
  -125
  -131
  -137
  -143
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  0
  -1
  -1
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -24
  -26
  -27
  -28
  -29
  -30
  -32
  -33
Discount rate, %
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
  0
  -1
  -1
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -7
  -6
  -6
  -5
  -5
  -4
  -4
  -3
  -3
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  81.4
  67.1
  56.1
  47.4
  40.4
  34.8
  30.2
  26.4
  23.2
  20.6
  18.5
  16.8
  15.2
  13.9
  12.7
  11.6
  10.7
  9.8
  9.1
  8.4
  7.7
  7.2
  6.7
  6.2
  5.8
  5.4
  5.0
  4.7
  4.4
  4.1

Orion Group Holdings, Inc., formerly Orion Marine Group, Inc., is engaged in heavy civil construction project management business. The Company specializes in marine construction. It provides a range of heavy civil marine construction services to federal agencies, state and municipal governments, and private commercial and industrial customers. Its heavy civil marine construction and project management services include new construction, dredging, repair and maintenance, and other related specialty services. It provides heavy civil marine construction services on, over and under the water in the continental United States, Alaska, Canada and the Caribbean Basin. It provides heavy civil marine construction services through projects that are obtained primarily through a competitive bid or contract process. It also provides tilt-wall construction services, parking structures, concrete slabs for commercial and institutional applications, curbs, gutters and paving, among other capabilities.

FINANCIAL RATIOS  of  Orion Group Holdings (ORN)

Valuation Ratios
P/E Ratio -29.2
Price to Sales 0.2
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 5.1
Price to Free Cash Flow 29.2
Growth Rates
Sales Growth Rate 23.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.5%
Cap. Spend. - 3 Yr. Gr. Rate 7.9%
Financial Strength
Quick Ratio 0
Current Ratio 0.4
LT Debt to Equity 36.3%
Total Debt to Equity 44.7%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.3%
Ret/ On Assets - 3 Yr. Avg. 0.7%
Return On Total Capital -1.2%
Ret/ On T. Cap. - 3 Yr. Avg. -0.4%
Return On Equity -1.8%
Return On Equity - 3 Yr. Avg. -0.7%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 11.6%
Gross Margin - 3 Yr. Avg. 10.6%
EBITDA Margin 6.4%
EBITDA Margin - 3 Yr. Avg. 6.5%
Operating Margin 0.7%
Oper. Margin - 3 Yr. Avg. 0.5%
Pre-Tax Margin -0.3%
Pre-Tax Margin - 3 Yr. Avg. -0%
Net Profit Margin -0.7%
Net Profit Margin - 3 Yr. Avg. -0.2%
Effective Tax Rate -100%
Eff/ Tax Rate - 3 Yr. Avg. -14.2%
Payout Ratio 0%

ORN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ORN stock intrinsic value calculation we used $578.553 million for the last fiscal year's total revenue generated by Orion Group Holdings. The default revenue input number comes from 0001 income statement of Orion Group Holdings. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ORN stock valuation model: a) initial revenue growth rate of 16.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.6%, whose default value for ORN is calculated based on our internal credit rating of Orion Group Holdings, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Orion Group Holdings.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ORN stock the variable cost ratio is equal to 99.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ORN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.1% for Orion Group Holdings.

Corporate tax rate of 27% is the nominal tax rate for Orion Group Holdings. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ORN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ORN are equal to 33.9%.

Life of production assets of 8.1 years is the average useful life of capital assets used in Orion Group Holdings operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ORN is equal to 14.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $231.266 million for Orion Group Holdings - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 28.891 million for Orion Group Holdings is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Orion Group Holdings at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Does Orion Group Holdings Incs (NYSE:ORN) CEO Pay Matter?   [Nov-15-18 02:19PM  Simply Wall St.]
▶ Orion Marine: 3Q Earnings Snapshot   [05:05AM  Associated Press]
▶ Orion Group Holdings, Inc. to Host Earnings Call   [Aug-02-18 08:00AM  ACCESSWIRE]
▶ Orion Marine: 2Q Earnings Snapshot   [05:18AM  Associated Press]
▶ Is Orion Investment SA (WSE:ORN) A Financially Sound Company?   [Jun-25-18 04:19AM  Simply Wall St.]
▶ Should Orion Investment SA. (WSE:ORN) Be Your Next Stock Pick?   [Jun-14-18 06:01AM  Simply Wall St.]
▶ Orion Marine: 1Q Earnings Snapshot   [May-03-18 05:56AM  Associated Press]
▶ Orion Group Holdings, Inc. to Host Earnings Call   [Mar-08-18 08:55AM  ACCESSWIRE]
▶ Orion Marine beats 4Q profit forecasts   [05:30AM  Associated Press]
▶ Orion Marine reports 3Q loss   [05:23AM  Associated Press]
▶ Orion Marine reports 2Q loss   [Aug-03-17 05:21PM  Associated Press]
▶ Orion Marine reports 1Q loss   [May-04-17 05:06AM  Associated Press]
▶ Orion Marine reports 4Q loss   [05:34AM  Associated Press]

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