Orion’s stock price has taken a beating over the past six months, shedding 63.3% of its value and falling to a new 52-week low of $2.21 per share. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Is now the time to buy Orion, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Even with the cheaper entry price, we're sitting this one out for now. Here are three reasons why ORN doesn't excite us and a stock we'd rather own.
Why Do We Think Orion Will Underperform?
Established in 1994, Orion (NYSE: ORN) provides construction services for marine infrastructure and industrial projects.
1. Long-Term Revenue Growth Disappoints
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Orion grew its sales at a sluggish 2.4% compounded annual growth rate. This fell short of our benchmarks. 
2. Low Gross Margin Reveals Weak Structural Profitability
At StockStory, we prefer high gross margin businesses because they indicate the company has pricing power or differentiated products, giving it a chance to generate higher operating profits.
Orion has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 9.2% gross margin over the last five years. That means Orion paid its suppliers a lot of money ($90.77 for every $100 in revenue) to run its business. 
3. EPS Trending Down
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Sadly for Orion, its EPS declined by 5.3% annually over the last five years while its revenue grew by 2.4%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
We cheer for all companies making their customers lives easier, but in the case of Orion, we’ll be cheering from the sidelines. Following the recent decline, the stock trades at 15.8× forward price-to-earnings (or $2.21 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. There are more exciting stocks to buy at the moment. Let us point you toward a top digital advertising platform riding the creator economy.
Stocks We Would Buy Instead of Orion
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