Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, Orion Group Holdings, Inc. (NYSE:ORN) does carry debt. But is this debt a concern to shareholders?
When Is Debt Dangerous?
Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.
What Is Orion Group Holdings's Net Debt?
You can click the graphic below for the historical numbers, but it shows that as of March 2024 Orion Group Holdings had US$64.2m of debt, an increase on US$55.8m, over one year. However, because it has a cash reserve of US$4.64m, its net debt is less, at about US$59.5m.
A Look At Orion Group Holdings' Liabilities
According to the last reported balance sheet, Orion Group Holdings had liabilities of US$163.6m due within 12 months, and liabilities of US$84.0m due beyond 12 months. On the other hand, it had cash of US$4.64m and US$203.5m worth of receivables due within a year. So its liabilities total US$39.3m more than the combination of its cash and short-term receivables.
Of course, Orion Group Holdings has a market capitalization of US$327.6m, so these liabilities are probably manageable. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. There's no doubt that we learn most about debt from the balance sheet. But it is future earnings, more than anything, that will determine Orion Group Holdings's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.
Over 12 months, Orion Group Holdings made a loss at the EBIT level, and saw its revenue drop to US$713m, which is a fall of 2.6%. We would much prefer see growth.
Caveat Emptor
Over the last twelve months Orion Group Holdings produced an earnings before interest and tax (EBIT) loss. Indeed, it lost US$317k at the EBIT level. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. However, it doesn't help that it burned through US$12m of cash over the last year. So suffice it to say we do consider the stock to be risky. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. These risks can be hard to spot. Every company has them, and we've spotted 4 warning signs for Orion Group Holdings (of which 1 doesn't sit too well with us!) you should know about.
If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. 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.
過去12か月で、オリオングループホールディングスはEBITで損失を出しました。実際には、EBITレベルで317,000ドルの損失を出しています。上記の負債とともに考慮すると、企業が多額の負債を抱えるべきでないと結論付けざるを得ません。正直言って、バランスシートは十分に整っているとは言えず、時間をかけて改善する必要があると思います。ただし、昨年は1,200万ドルの現金を消費したことが追い打ちをかけています。言うまでもなく、この株式はリスクがあると考えられます。負債を分析する際には、バランスシートが明らかに重要になります。ただし、バランスシート以外にも、企業にはリスクが存在することがあります。これらのリスクは理解するのが難しい場合があります。すべての企業にはリスクがあるという事実があり、私たちはOrion Group Holdingsの4つの警告サイン(それぞれ1つはあまり良くない)を発見しました。このことを知っておく必要があります。
警告:
過去12か月間、オリオングループホールディングスはEBITレベルで損失を出し、収益が7,130万ドルに落ちました。これは2.6%減少です。過度に債務を抱えたり、現金を使いすぎたりしたため、この株式はリスクがあると考えられます。企業の負債分析については、バランスシートに注目することが必要です。しかしそのバランスシート以外にも、企業にはバランスシート以外のリスクが常に存在します。それらは見るのが難しいかもしれません。すべての企業にはリスク要因が存在し、Orion Group Holdingsには4つの警告サイン(内1つはあまり良くありません)があります。これらについて知っておく必要があります。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。