Orion S.A. (NYSE: OEC)

Sector: Basic Materials Industry: Specialty Chemicals CIK: 0001609804
Market Cap 338.29 Mn
P/B 0.84
P/E -10.64
P/S 0.18
ROIC (Qtr) 2.78
Div Yield % 1.30
Rev 1y % (Qtr) -2.70
Total Debt (Qtr) 1.01 Bn
Debt/Equity (Qtr) 2.51

About

Orion S.A., listed on the Luxembourg Stock Exchange under the ticker symbol OEC, is a prominent player in the carbon black manufacturing industry (Orion S.A.). This Luxembourg-based company is known for its production and sale of carbon black, a powdered form of carbon that imparts specific physical, electrical, and optical properties to various materials. The company's operations span the globe, with a significant presence in the carbon black market. Orion's primary business activities involve the production and sale of carbon black, which finds...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 217.40M provides strong 15.53x coverage of stock compensation 14M, indicating sustainable incentive practices.
  • Tangible assets of 1.95B provide robust 15.67x coverage of other current liabilities 124.30M, indicating strong asset backing.
  • Robust tangible asset base of 1.95B provides 40.42x coverage of working capital 48.20M, indicating strong operational backing.
  • Retained earnings of 403.30M provide strong 3.24x coverage of other current liabilities 124.30M, indicating earnings quality.
  • Operating cash flow of 217.40M provides strong 3.02x coverage of operating expenses 72.10M, showing operational efficiency.

Bear case

  • Operating cash flow of 217.40M barely covers its investment activities of (183.30M), with a coverage ratio of -1.19, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 51.30M against inventory of 278.90M, the 0.18 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 217.40M provides thin coverage of dividend payments of (4.70M) with a -46.26 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (183.30M) provide weak support for R&D spending of 27M, which is -6.79x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Free cash flow of 34.10M provides weak coverage of capital expenditures of 183.30M, with a 0.19 ratio suggesting additional external financing needs for growth initiatives.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Chemicals
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LIN Linde Plc 218.63 Bn 38.41 6.61 25.93 Bn
2 SHW Sherwin Williams Co 110.34 Bn 170.54 11.54 13.58 Bn
3 ECL Ecolab Inc. 80.35 Bn 80.18 5.93 8.67 Bn
4 APD Air Products & Chemicals, Inc. 56.37 Bn 48.29 5.86 18.31 Bn
5 PPG Ppg Industries Inc 34.00 Bn 31.05 2.58 7.91 Bn
6 LYB LyondellBasell Industries N.V. 17.46 Bn 5.03 0.49 13.22 Bn
7 DD DuPont de Nemours, Inc. 16.63 Bn 3.65 0.32 8.90 Bn
8 ALB Albemarle Corp 14.44 Bn 48.94 6.36 3.63 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.67 1.52
EV to Cash from Ops. EV/CFO 6.06 12.52
EV to Debt EV to Debt 1.30 13.65
EV to EBIT EV/EBIT 37.76 21.45
EV to EBITDA EV/EBITDA 7.61 14.82
EV to Free Cash Flow [EV/FCF] EV/FCF 38.65 29.24
EV to Market Cap EV to Market Cap 3.90 3.84
EV to Revenue EV/Rev 0.72 89.11
Price to Book Value [P/B] P/B 0.84 5.48
Price to Earnings [P/E] P/E -10.64 16.02
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -6.77 -5.31
Dividend Payout Ratio % Div Payout % (Qtr) -14.40 -75.74
Dividend per Basic Share Div per Share (Qtr) 0.08 1.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 13.65 23.50
Interest Coverage Int. cover (Qtr) 0.63 -8.92
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 7.19 -1.67
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -3.57 72.99
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -3.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -9.98 -31.21
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -24.31 51.49
EBIT Growth (1y) % EBIT 1y % (Qtr) -68.01 0.57
EBT Growth (1y) % EBT 1y % (Qtr) -135.42 -80.35
EPS Growth (1y) % EPS 1y % (Qtr) -205.45 -90.82
FCF Growth (1y) % FCF 1y % (Qtr) 136.08 -50.40
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -12.98 219.02
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.93 0.70
Cash Payout Ratio Cash Payout (Qtr) 0.01 0.41
Cash Ratio Cash Ratio (Qtr) 0.08 1.28
Current Ratio Curr Ratio (Qtr) 1.08 3.42
Debt to Equity Ratio Debt/Equity (Qtr) 2.51 0.92
Interest Cover Ratio Int Coverage (Qtr) 0.63 -8.92
Times Interest Earned Times Interest Earned (Qtr) 0.63 -8.92
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 9.20 -333.97
EBIT Margin % EBIT Margin % (Qtr) 1.91 -374.34
EBT Margin % EBT Margin % (Qtr) -1.14 -379.75
Gross Margin % Gross Margin % (Qtr) 20.30 29.26
Net Profit Margin % Net Margin % (Qtr) -1.70 -380.67