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Unsurprisingly, Orion Group Holdings, Inc.'s (NYSE:ORN) stock price was strong on the back of its healthy earnings report. However, we think that shareholders may be missing some concerning details in the numbers.
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In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Orion Group Holdings expanded the number of shares on issue by 20% over the last year. As a result, its net income is now split between a greater number of shares. To talk about net income, without noticing earnings per share, is to be distracted by the big numbers while ignoring the smaller numbers that talk to per share value. You can see a chart of Orion Group Holdings' EPS by clicking here.
A Look At The Impact Of Orion Group Holdings' Dilution On Its Earnings Per Share (EPS)
Orion Group Holdings was losing money three years ago. And even focusing only on the last twelve months, we don't have a meaningful growth rate because it made a loss a year ago, too. But mathematics aside, it is always good to see when a formerly unprofitable business come good (though we accept profit would have been higher if dilution had not been required). So you can see that the dilution has had a bit of an impact on shareholders.
In the long term, if Orion Group Holdings' earnings per share can increase, then the share price should too. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. For the ordinary retail shareholder, EPS is a great measure to check your hypothetical "share" of the company's profit.
That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.
The Impact Of Unusual Items On Profit
Alongside that dilution, it's also important to note that Orion Group Holdings' profit was boosted by unusual items worth US$2.9m in the last twelve months. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. If Orion Group Holdings doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.