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Bear of the Day: Orion Group (ORN)

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There are some industries which are absolutely on fire in this environment. The huge shift in economic behaviors following the pandemic has created amazing opportunities. However, there are some industries which are being left in the dust. One way to find industries to avoid is by looking at the Zacks Rank. Stocks with weak earnings trends will be on the lower end of our Zacks Rank. Get enough of these stocks in the same industry and you have an industry which falls down our Zacks Industry Rank.

Today’s Bear of the Day is a stock in the Building Products – Heavy Construction industry which ranks in the Bottom 9% of our Zacks Industry Rank. It’s Orion Group ORN. Orion Group Holdings, Inc. operates as a specialty construction company in the building, industrial, and infrastructure sectors in the continental United States, Alaska, Canada, and the Caribbean Basin. It operates in two segments, Marine and Concrete. The company provides various marine construction services, including construction, restoration, dredging, maintenance, and repair of marine transportation facilities and pipelines, bridges and causeways, and marine environmental structures. Its marine transportation facility projects comprise public port facilities, cruise ship port facilities, private terminals, special-use navy terminals, recreational use marinas and docks, and other marine-based facilities.

It does not take an insider on Wall Street to understand why a stock like this is under pressure. The company counts cruise ship operator Carnival as one of its largest private customers and those private customers made up 39% of its marine segment revenues in 2020. With the world on hold, these projects took a back seat.

Over the last sixty days, analysts have cut their earnings estimates for the current quarter, next quarter and next year. The bearish sentiment has slashed our Zacks Consensus Estimate for next year from 44 cents to 21 cents. This year’s number is off from a 14-cent profit to a 25-cent loss. That current year number represents a large contraction in earnings from the year ago EPS number of 47 cents. The good news for long-term investors is that next year’s number represents a return to growth. Revenues, which contracted by 18.49% this year are slated to grow by 9.2% next year.

Other stocks within the same industry that are in the good graces of our Zacks Rank include Zacks Rank #1 (Strong Buy) Sterling Construction STRL and EMCOR Group EME.


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