Orbital Energy Group

Stock: OEG

Rating: Good

Author: Waleed M. Tariq

Company Overview

  • OEG is a diverse infrastructure service corporation with three segments: Power, Telecom, and Renewables.
  • Orbital Gas Systems’ UK and North American operations will be sold in December 2021.

Bullish

  • Acquisitions and M&A deals in past times have led to over 1100 percent YoY revenue increase.
  • The company expects 5x sales increase in 2022 over 2021.
  • I like the stock’s growth prospects and pricing.

Bearish

  • Orbital Energy stock has underperformed its financial performance.

2022: A Turning Point

  • Prior year acquisitions have lifted revenues from $5.6 million in Q1 2021 to $70.25 million in Q1 2022.
  • Revenue will nearly fivefold from $83 million in 2021 to $400 million in 2022.
  • The company’s EBITDA margin improved to 9.8%, in line with midpoint 2022 expectations of $40.5 million.
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Data by YCharts
  • The corporation is paying off its debts using operating funds and share issuance.

Valuation

  • The company’s $0.94 share price and $90 million market cap are attractive due to overstated 2022 projections.
  • Trading so cheap signals investment potential for a 100% growth company.

Business risks

  • Great expansion was costly. Debt damaged the balance sheet. Debt raises interest costs and leverage. OEG deleveraging dilution.
Chart
Data by YCharts

Conclusion

  • Despite concerns, the company’s risk-reward ratio benefits investors because market demand boosts the stock price whenever financial results approach projections.