Orion Group Holdings, Inc. (NYSE:ORN) Might Not Be As Mispriced As It Looks After Plunging 29%

Unfortunately for some shareholders, the Orion Group Holdings, Inc. (NYSE:ORN) share price has dived 29% in the last thirty days, prolonging recent pain. The last month has meant the stock is now only up 7.1% during the last year.

After such a large drop in price, considering around half the companies operating in the United States' Construction industry have price-to-sales ratios (or "P/S") above 1.1x, you may consider Orion Group Holdings as an solid investment opportunity with its 0.3x P/S ratio. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for Orion Group Holdings

How Orion Group Holdings Has Been Performing

Recent times haven't been great for Orion Group Holdings as its revenue has been rising slower than most other companies. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

Want the full picture on analyst estimates for the company? Then our free report on Orion Group Holdings will help you uncover what's on the horizon.

How Is Orion Group Holdings' Revenue Growth Trending?

Orion Group Holdings' P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

Taking a look back first, we see that there was hardly any revenue growth to speak of for the company over the past year. Still, the latest three year period was better as it's delivered a decent 9.7% overall rise in revenue. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.

Shifting to the future, estimates from the three analysts covering the company suggest revenue should grow by 25% over the next year. That's shaping up to be materially higher than the 11% growth forecast for the broader industry.

With this information, we find it odd that Orion Group Holdings is trading at a P/S lower than the industry. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

What Does Orion Group Holdings' P/S Mean For Investors?

The southerly movements of Orion Group Holdings' shares means its P/S is now sitting at a pretty low level. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

A look at Orion Group Holdings' revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. The reason for this depressed P/S could potentially be found in the risks the market is pricing in. While the possibility of the share price plunging seems unlikely due to the high growth forecasted for the company, the market does appear to have some hesitation.

Before you settle on your opinion, we've discovered 2 warning signs for Orion Group Holdings that you should be aware of.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.