Good value at $1?

I am looking to buy into DCG.  It has strong but recommendations from a number of brokers.  Clime put a fundamental value of $1.41 on their shares for a required return of 14%.  Their summary is:

"DCG has sound historical profitability and a strong balance sheet. Given the inherent risks of the contracting business, investors should ensure there is a sufficient margin of safety before investing. DCG is currently trading below its FY15 valuation."

At a margin of SP discounted to valuation by 39% it appears thats safety margin enough.

While the last AR showed some negativities, Clime point out that "Operating cash flow exceeding reported net profit in four of the last five years – a good cash realisation outcome."

Margins are obviously under pressure, with revenue showing an 8% increase during the last year, yet profits down 18.9%.  An payout ratio of only 54% is good to underpin business growth, but that has increased from a more typical 43%.

The revenue forecast for '16 is $450 - $550M, significantly down on the $666 achieved in '15, presumably because O&G (Gladstone) is transitioning to production and the minerals sector is flat.  Defence and rail work seem to be slightly better.

The question is: while the data shows a shrinking business for '16, has the price retracement over-reacted?  Last year, the SP averaged about $2.00.  This year, with a 20% decrease in NPAT and EPS, the SP is down to about 50%.  The trick is in recognising future risk.

I don't see the problem some see with the order book - it looks healthy enough.  Am I missing something?