Investment Thesis
Orion Group faces fundamental operational distress: negative operating income despite positive net income signals non-recurring items masking deteriorating core business. Negative free cash flow of -$3.6M and interest coverage of -0.2x reveal the company cannot service its $66.3M debt from operations, creating significant solvency risk.
Strengths
- 7% revenue growth demonstrates market traction in heavy construction segment
- Debt-to-equity ratio of 0.40x shows moderate leverage, not excessive indebtedness
- Current ratio of 1.41x indicates adequate near-term liquidity to meet obligations
Risks
- Operating income negative (-$795K) while net income positive signals dependence on non-operating gains; core business is unprofitable
- Interest coverage ratio of -0.2x indicates company cannot cover debt service from operating cash flow
- Negative free cash flow (-$3.6M) is unsustainable; company burning capital despite revenue growth
- Extremely poor capital efficiency: ROE 2.8% and ROA 1.0% indicate wealth destruction for shareholders
- Gross margin of only 12% suggests razor-thin project profitability typical of distressed contractors
Key Metrics to Watch
- Operating cash flow trend and sustainability of positive OCF
- Free cash flow trajectory—path to positive FCF is critical for survival
- Interest coverage ratio—must turn positive to reduce solvency concerns
- Gross margin expansion—need evidence of project profitability improvement
- Cash balance relative to debt maturity schedule—liquidity runway with $6.3M cash
Financial Metrics
Revenue
216.3M
Net Income
4.7M
EPS (Diluted)
$0.12
Free Cash Flow
-3.7M
Total Assets
478.7M
Cash
6.3M
Profitability Ratios
Gross Margin
12.0%
Operating Margin
-0.4%
Net Margin
2.2%
ROE
2.8%
ROA
1.0%
FCF Margin
-1.7%
Balance Sheet & Liquidity
Current Ratio
1.41x
Quick Ratio
1.40x
Debt/Equity
0.40x
Debt/Assets
65.2%
Interest Coverage
-0.24x
Long-term Debt
66.3M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T13:36:43.339222 |
Data as of: 2026-03-31 |
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