Intrinsic value of Orion Group Holdings - ORN

Previous Close

$9.08

  Intrinsic Value

$2.28

stock screener

  Rating & Target

str. sell

-75%

Previous close

$9.08

 
Intrinsic value

$2.28

 
Up/down potential

-75%

 
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 2017), $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 0.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  591
  604
  620
  637
  656
  678
  701
  726
  753
  781
  812
  845
  880
  918
  957
  999
  1,044
  1,091
  1,140
  1,193
  1,248
  1,306
  1,368
  1,433
  1,501
  1,573
  1,648
  1,728
  1,811
  1,899
Variable operating expenses, $m
  586
  599
  614
  631
  650
  671
  693
  718
  744
  772
  794
  826
  860
  896
  935
  976
  1,020
  1,065
  1,114
  1,165
  1,219
  1,276
  1,336
  1,399
  1,466
  1,536
  1,610
  1,688
  1,769
  1,855
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
  586
  599
  614
  631
  650
  671
  693
  718
  744
  772
  794
  826
  860
  896
  935
  976
  1,020
  1,065
  1,114
  1,165
  1,219
  1,276
  1,336
  1,399
  1,466
  1,536
  1,610
  1,688
  1,769
  1,855
Operating income, $m
  5
  5
  6
  6
  6
  7
  7
  8
  9
  9
  19
  20
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  36
  38
  40
  42
  44
EBITDA, $m
  38
  39
  40
  41
  42
  44
  45
  47
  49
  51
  53
  55
  57
  59
  62
  65
  68
  71
  74
  77
  81
  85
  88
  93
  97
  102
  107
  112
  117
  123
Interest expense (income), $m
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  25
  26
  28
  30
  31
Earnings before tax, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  9
  9
  10
  10
  10
  10
  10
  10
  10
  10
  11
  11
  11
  11
  11
  12
  12
  12
  12
  13
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
Net income, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  7
  7
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  8
  8
  8
  8
  9
  9
  9
  9

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
  442
  453
  464
  477
  492
  508
  525
  544
  564
  585
  609
  633
  660
  687
  717
  749
  782
  817
  854
  893
  935
  978
  1,025
  1,073
  1,124
  1,178
  1,235
  1,294
  1,357
  1,423
Adjusted assets (=assets-cash), $m
  442
  453
  464
  477
  492
  508
  525
  544
  564
  585
  609
  633
  660
  687
  717
  749
  782
  817
  854
  893
  935
  978
  1,025
  1,073
  1,124
  1,178
  1,235
  1,294
  1,357
  1,423
Revenue / Adjusted assets
  1.337
  1.333
  1.336
  1.335
  1.333
  1.335
  1.335
  1.335
  1.335
  1.335
  1.333
  1.335
  1.333
  1.336
  1.335
  1.334
  1.335
  1.335
  1.335
  1.336
  1.335
  1.335
  1.335
  1.336
  1.335
  1.335
  1.334
  1.335
  1.335
  1.335
Average production assets, $m
  245
  251
  257
  264
  272
  281
  291
  301
  312
  324
  337
  351
  365
  381
  397
  415
  433
  453
  473
  495
  518
  542
  568
  594
  623
  653
  684
  717
  752
  788
Working capital, $m
  -38
  -39
  -40
  -41
  -43
  -44
  -46
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -74
  -78
  -81
  -85
  -89
  -93
  -98
  -102
  -107
  -112
  -118
  -123
Total debt, $m
  90
  95
  100
  106
  113
  120
  128
  137
  146
  156
  167
  179
  191
  204
  218
  232
  248
  264
  282
  300
  319
  340
  361
  384
  407
  433
  459
  487
  516
  547
Total liabilities, $m
  206
  211
  216
  222
  229
  237
  245
  253
  263
  273
  284
  295
  307
  320
  334
  349
  364
  381
  398
  416
  436
  456
  477
  500
  524
  549
  575
  603
  632
  663
Total equity, $m
  236
  242
  248
  255
  263
  271
  280
  290
  301
  313
  325
  338
  352
  367
  383
  400
  417
  436
  456
  477
  499
  523
  547
  573
  600
  629
  659
  691
  725
  760
Total liabilities and equity, $m
  442
  453
  464
  477
  492
  508
  525
  543
  564
  586
  609
  633
  659
  687
  717
  749
  781
  817
  854
  893
  935
  979
  1,024
  1,073
  1,124
  1,178
  1,234
  1,294
  1,357
  1,423
Debt-to-equity ratio
  0.380
  0.390
  0.400
  0.420
  0.430
  0.440
  0.460
  0.470
  0.490
  0.500
  0.510
  0.530
  0.540
  0.560
  0.570
  0.580
  0.590
  0.610
  0.620
  0.630
  0.640
  0.650
  0.660
  0.670
  0.680
  0.690
  0.700
  0.700
  0.710
  0.720
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
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  7
  7
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  8
  8
  8
  8
  9
  9
  9
  9
Depreciation, amort., depletion, $m
  33
  34
  35
  35
  36
  37
  38
  39
  40
  41
  34
  35
  37
  38
  40
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  72
  75
  79
Funds from operations, $m
  33
  34
  34
  35
  36
  37
  38
  39
  40
  42
  41
  42
  43
  45
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
Cash from operations, $m
  34
  34
  35
  36
  37
  38
  39
  41
  42
  43
  43
  44
  46
  48
  49
  51
  54
  56
  58
  61
  63
  66
  69
  72
  75
  78
  82
  86
  90
  94
Maintenance CAPEX, $m
  -24
  -25
  -25
  -26
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -59
  -62
  -65
  -68
  -72
  -75
New CAPEX, $m
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -37
Cash from investing activities, $m
  -29
  -31
  -31
  -33
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -66
  -69
  -72
  -76
  -80
  -84
  -87
  -92
  -96
  -101
  -107
  -112
Free cash flow, $m
  5
  4
  4
  3
  3
  2
  2
  1
  1
  0
  -3
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
Issuance/(repayment) of debt, $m
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
Issuance/(repurchase) of shares, $m
  6
  6
  6
  7
  8
  8
  9
  10
  11
  11
  6
  6
  7
  8
  9
  10
  10
  11
  12
  13
  14
  15
  17
  18
  19
  20
  22
  23
  24
  26
Cash from financing (excl. dividends), $m  
  10
  11
  11
  13
  15
  15
  17
  19
  20
  21
  17
  18
  19
  21
  23
  25
  26
  27
  29
  31
  33
  35
  38
  41
  43
  45
  48
  51
  53
  57
Total cash flow (excl. dividends), $m
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  14
  15
  15
  16
  17
  18
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
Retained Cash Flow (-), $m
  -6
  -6
  -6
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
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
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
Cash available for distribution, $m
  9
  9
  9
  9
  10
  10
  10
  10
  10
  10
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
Discount rate, %
  4.70
  4.94
  5.18
  5.44
  5.71
  6.00
  6.30
  6.61
  6.94
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.77
  11.31
  11.88
  12.47
  13.09
  13.75
  14.44
  15.16
  15.92
  16.71
  17.55
  18.42
  19.35
PV of cash for distribution, $m
  8
  8
  8
  8
  7
  7
  6
  6
  5
  5
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  97.9
  95.8
  93.5
  91.1
  88.7
  86.2
  83.6
  81.0
  78.4
  75.9
  74.6
  73.3
  72.0
  70.5
  69.1
  67.5
  66.0
  64.4
  62.8
  61.1
  59.5
  57.9
  56.3
  54.7
  53.1
  51.5
  49.9
  48.4
  46.9
  45.4

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 -62.9
Price to Sales 0.4
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 10.9
Price to Free Cash Flow 62.9
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 $579 million for the last fiscal year's total revenue generated by Orion Group Holdings. The default revenue input number comes from 2017 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 2% 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 4.7%, 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 99.2%.

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 0.4%.

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 41.5%.

Life of production assets of 10 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 -6.5%. 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 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 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 $0.3 billion.

RELATED COMPANIES Price Int.Val. Rating
GLDD Great Lakes Dr 5.75 0.56  str.sell
ACM AECOM 32.61 105.28  str.buy
LAYN Layne Christen 15.41 0.89  str.sell
USDP USD Partners 10.50 3.10  str.sell
STRL Sterling Const 13.53 256.20  str.buy
FLR Fluor 48.92 52.71  hold

COMPANY NEWS

▶ 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]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.