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Montrose Environmental Group (MEG)
NYSE:MEG
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Montrose Environmental Group
(NYSE:MEG)
Rating:64Neutral
Price Target:
$20.50
▲( 5.13% Upside)
Positive Factors
Earnings Performance
MEG got off to a better than expected start in 2025, posting 14.5% growth in Q1 revenues, vs. consensus +8%.
Market Position
Management remains confident about MEG’s prospects, including its position in the market and strong momentum across business lines and margin tailwinds.
Valuation
Shares are viewed as significantly undervalued at only 10 times next-12-months adjusted EBITDA, which is well below the broader peer group and Montrose’s historical average range.
Negative Factors
Regulatory Challenges
Shares traded up more than 30% following fourth-quarter results, only to give those gains back in the intervening weeks on negative headlines regarding environmental deregulation and funding cuts/restructuring at the EPA.
Stock Performance
Montrose Environmental Group shares have been significant under-performers over much of the past nine months.
Montrose Environmental Group (MEG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$674.06M
Dividend YieldN/A
Average Volume (3M)482.52K
Price to Earnings (P/E)―
Beta (1Y)1.41
Revenue Growth10.92%
EPS Growth-57.13%
CountryUS
Employees3,400
SectorIndustrials
Sector Strength90
IndustryWaste Management
Share Statistics
EPS (TTM)-0.64
Shares Outstanding34,216,240
10 Day Avg. Volume531,180
30 Day Avg. Volume482,517
Financial Highlights & Ratios
PEG Ratio0.13
Price to Book (P/B)1.35
Price to Sales (P/S)0.00
P/FCF Ratio-380.89
Enterprise Value/Market Cap1.30
Enterprise Value/Revenue0.33
Enterprise Value/Gross Profit3.30
Enterprise Value/Ebitda6.32
Forecast
1Y Price Target
$29.00Price Target Upside48.72% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Montrose Environmental Group Business Overview & Revenue Model
Company DescriptionMontrose Environmental Group (MEG) is a leading provider of environmental solutions, specializing in air quality, environmental laboratory services, regulatory compliance, and engineering. Operating across various sectors including industrial, government, and commercial, MEG delivers comprehensive services that help clients meet environmental regulations and sustainability goals. Its core products and services include air measurement and analysis, environmental laboratory testing, and consulting services aimed at ensuring regulatory compliance and environmental stewardship.
How the Company Makes MoneyMontrose Environmental Group makes money through a diversified revenue model that includes service fees for air quality measurement, environmental laboratory analyses, and consulting services. The company charges clients for conducting environmental assessments and providing solutions that ensure compliance with environmental regulations. MEG's key revenue streams are derived from contracts with industrial firms, governmental bodies, and commercial entities seeking to manage their environmental impact. The company also benefits from strategic partnerships and acquisitions that expand its service offerings and client base, contributing significantly to its earnings.
Montrose Environmental Group Financial Statement Overview
Summary
Montrose Environmental Group demonstrates strong revenue growth but struggles with persistent net losses and negative cash flow, indicating profitability and liquidity challenges. The balance sheet is stable with low leverage, but high capital expenditures and operational inefficiencies pose financial risks.Income Statement
Montrose Environmental Group's revenue has shown consistent growth, with a TTM revenue increase of 11.57% from the previous year. However, the company has been facing persistent net losses, indicating challenges in achieving profitability. The gross profit margin improved to 38.14% in TTM, but negative EBIT and EBITDA margins highlight operational inefficiencies.45
Neutral
Balance Sheet
The balance sheet reflects moderate financial stability with a debt-to-equity ratio of 0.17, indicating a conservative leverage position. The equity ratio is 45.06%, suggesting a solid capital structure. However, the company has been experiencing fluctuations in equity due to recurring net losses.60
Neutral
Cash Flow
Free cash flow has turned negative in the TTM period, reflecting a free cash flow decline from the previous year. The operating cash flow to net income ratio is negative, indicating the company is struggling to convert its earnings into cash flow. High capital expenditures contribute to cash outflows, impacting liquidity.40
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 696.39M | 624.21M | 544.42M | 546.41M | 328.24M | Gross Profit |
| 278.20M | 240.31M | 192.53M | 177.38M | 112.75M | EBIT |
| -36.72M | -28.42M | -27.56M | 12.37M | -30.34M | EBITDA |
| 25.88M | 31.93M | 32.44M | 36.91M | -7.41M | Net Income Common Stockholders |
| -62.31M | -30.86M | -31.82M | -25.32M | -57.95M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 12.94M | 23.24M | 89.83M | 146.25M | 34.39M | Total Assets |
| 990.35M | 816.79M | 791.91M | 833.09M | 602.73M | Total Debt |
| 281.00M | 210.34M | 202.12M | 205.77M | 175.90M | Net Debt |
| 268.06M | 187.10M | 112.29M | 59.52M | 141.52M | Total Liabilities |
| 544.09M | 342.61M | 325.80M | 363.67M | 312.65M | Stockholders Equity |
| 446.26M | 474.18M | 466.12M | 469.43M | 290.07M |
| Cash Flow | Free Cash Flow | |||
| 902.00K | 23.09M | 10.65M | 30.00M | -5.93M | Operating Cash Flow |
| 22.23M | 56.02M | 20.65M | 37.58M | 1.85M | Investing Cash Flow |
| -138.04M | -101.62M | -38.69M | -71.64M | -179.74M | Financing Cash Flow |
| 106.00M | -20.11M | -38.76M | 146.10M | 205.90M |
Montrose Environmental Group Technical Analysis
Positive
19.50
Price Trends
15.39
Positive
17.67
Positive
21.34
Negative
Market Momentum
1.29
Negative
72.16
Negative
56.44
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MEG, the sentiment is Positive. The current price of 19.5 is above the 20-day moving average (MA) of 16.79, above the 50-day MA of 15.39, and below the 200-day MA of 21.34, indicating a neutral trend. The MACD of 1.29 indicates Negative momentum. The RSI at 72.16 is Negative, neither overbought nor oversold. The STOCH value of 56.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MEG.
Montrose Environmental Group Risk Analysis
Montrose Environmental Group disclosed 49 risk factors in its most recent earnings report. Montrose Environmental Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Montrose Environmental Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $7.37B | 522.80 | 1.00% | ― | 21.63% | -30.27% | |
64 Neutral | $4.46B | 11.94 | 5.17% | 249.36% | 4.00% | -12.35% | |
64 Neutral | $674.06M | ― | -14.32% | ― | 10.92% | -57.13% | |
54 Neutral | $631.90M | ― | -26.25% | ― | 5.42% | -29.97% | |
47 Neutral | $190.16M | ― | -41.10% | ― | -28.62% | -543.45% | |
46 Neutral | $48.91M | ― | -44.84% | ― | -0.91% | -305.99% |
* Industrials Sector Average
Performance Comparison
MEG
Montrose Environmental Group
19.50
-27.65
-58.64%
CWST
Casella Waste
114.65
16.79
17.16%
NVRI
Enviri
7.59
-0.90
-10.60%
PESI
Perma-Fix
10.15
-0.49
-4.61%
QRHC
Quest Resource
2.28
-7.03
-75.51%
Montrose Environmental Group Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: 29.57%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Positive
The earnings call reflected a generally positive outlook with record-breaking revenue, increased EBITDA guidance, and significant cash flow improvements highlighting strong operational performance. Despite some challenges in specific segments, the overall business momentum remains strong.Q1-2025 Updates
Positive Updates
Record First Quarter Revenue
Achieved a record first quarter revenue of $177.8 million, representing a 14.5% increase compared to $155.3 million in the prior year period.
Increased EBITDA Guidance
Raised full year 2025 EBITDA guidance to a range of $103 million to $110 million, up from the previous range of $101 million to $108 million.
Strong Organic Growth
Reported 7% to 9% organic growth expectation supported by strong demand across all segments, particularly in Remediation and Reuse and Measurement and Analysis.
Significant Cash Flow Improvement
Achieved net cash provided by operating activities of $5.5 million in the first quarter, a $27.5 million improvement compared to net cash used in the prior year period.
Inaugural Stock Repurchase Program
Announced a stock repurchase program of up to $40 million, reflecting confidence in the company's strong financial and operating performance.
Negative Updates
Decrease in Assessment, Permitting and Response Segment Revenue
Revenue from the Assessment, Permitting, and Response segment decreased to $53.1 million from $58.6 million in the prior year due to a lack of repeat large projects and lower emergency response revenues.
Lower Diluted Adjusted Net Income Per Share
Diluted adjusted net income per share decreased to $0.07 from $0.16 in the prior year period, primarily due to higher interest and tax expenses and a higher share count.
Company Guidance
During Montrose Environmental Group's first quarter 2025 earnings call, the company provided updated guidance reflecting their robust performance and optimistic outlook for the year. Montrose achieved record first quarter revenues of $177.8 million, a 14.5% increase compared to the prior year, with consolidated adjusted EBITDA rising to $19 million. The company raised its full-year 2025 consolidated adjusted EBITDA guidance to a range of $103 million to $110 million, up from the previous range of $101 million to $108 million, with an expected revenue range of $735 million to $785 million. Montrose reiterated its organic growth expectation of 7% to 9%, driven by strong demand for environmental solutions and strategic positioning in response to market dislocations. The company also announced a stock repurchase program of up to $40 million, highlighting their commitment to maximizing shareholder value. Despite macroeconomic uncertainties, Montrose remains confident in its ability to enhance EBITDA margins, continue organic growth, and optimize its balance sheet.Montrose Environmental Group Corporate Events
Executive/Board ChangesShareholder Meetings
Montrose Environmental Group Holds Annual Stockholders Meeting
Neutral
May 9, 2025
On May 6, 2025, Montrose Environmental Group, Inc. held its Annual Meeting of Stockholders where several key decisions were made. The stockholders approved an amendment to declassify the Board of Directors, phasing in annual elections by 2028, and ratified Deloitte & Touche LLP as the independent auditor for 2025. Additionally, the compensation of executive officers was approved on a non-binding basis. These changes aim to enhance governance and accountability within the company.
Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Montrose Environmental Group Reports Record Q1 Results
Positive
May 7, 2025
On May 7, 2025, Montrose Environmental Group reported record first-quarter results with revenue reaching $177.8 million, a 14.5% increase from the previous year. The company announced an inaugural stock repurchase program of up to $40 million and increased its 2025 guidance for Consolidated Adjusted EBITDA. Despite a net loss of $19.4 million, Montrose achieved its highest-ever first-quarter operating cash flow and maintained significant liquidity. The company’s strategic focus on organic growth and capital allocation priorities, including the redemption of preferred equity, underpins its strengthened financial outlook for 2025.
Business Operations and StrategyFinancial Disclosures
Montrose Environmental Group Reports Record 2024 Financial Results
Positive
Feb 26, 2025
Montrose Environmental Group reported record financial results for the fourth quarter and full year of 2024, with significant revenue growth driven by acquisitions and organic expansion. Despite a net loss due to a one-time charge and increased expenses, the company achieved a record Consolidated Adjusted EBITDA, reflecting improved operating efficiencies and strategic advantages. Looking forward to 2025, Montrose anticipates continued revenue and EBITDA growth, supported by strong market demand and strategic focus on margin expansion and cash flow improvement.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.