Montrose Environmental Group (MEG) AI Stock Analysis

• Market Cap: $847.34M
• Dividend Yield: N/A
• Average Volume (3M): 428.56K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.30
• Revenue Growth: 22.77%
• EPS Growth: 44.73%
• Country: US
• Employees: 3,400
• Sector: Industrials
• Sector Strength: 72
• Industry: Waste Management
• EPS (TTM): -0.23
• Shares Outstanding: 35,980,650
• 10 Day Avg. Volume: 421,093
• 30 Day Avg. Volume: 428,559
• PEG Ratio: 11.04
• Price to Book (P/B): 1.93
• Price to Sales (P/S): 1.05
• P/FCF Ratio: 9.57
• Enterprise Value/Market Cap: 1.38
• Enterprise Value/Revenue: 1.41
• Enterprise Value/Gross Profit: 3.63
• Enterprise Value/Ebitda: 14.33
• 1Y Price Target: $35.20
• Price Target Upside: 49.47% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 0.16
• Revenue Forecast (FY): $863.71M

• Rating: 74 Outperform
• Price Target: $28.00 ▲(18.90% Upside)
• Action: Reiterated Date: 02/27/26
• Date: Action: Reiterated 02/27/26

The score is driven primarily by improving financial performance (strong cash generation, deleveraging, and operating profit inflection) and a bullish technical trend. This is tempered by weaker valuation optics (negative P/E, no dividend) and execution/cadence risks highlighted on the earnings call (segment margin pressure and lumpy emergency response revenue).

Positive Factors

Strong free cash flow generation

Sustained, high free cash flow in 2025 improves liquidity and funds organic investment, bolt‑on M&A and the $40M buyback without raising leverage. Durable cash conversion underpins capital allocation flexibility and reduces refinancing risk over the next several quarters.

Sharply improved balance sheet

Material deleveraging and elimination of preferred stock materially lower financial risk and interest burden, giving management room to pursue prudent M&A, repurchases and R&D. A stronger balance sheet improves resilience to cyclical downturns and funds strategic investments.

Robust top-line growth and cross-selling

High organic growth and rising cross-sell penetration indicate broadened client relationships and stickier revenue streams. Diversified service lines and successful commercial execution support sustained revenue growth and margin tailwinds across core end markets over the medium term.

Negative Factors

Net income still slightly negative

Persistent net losses keep return metrics negative despite operating improvement, limiting ROE and constraining long-term shareholder return options. The company needs sustained positive net income to normalize earnings, fund dividends, or materially scale buybacks without risking capital structure.

Lumpy emergency response revenue

Reliance on episodic emergency response creates quarter-to-quarter cadence and margin volatility, complicating forecasting and smoothing of operating margins. Structural unpredictability in this revenue stream can impede consistent margin expansion and working capital planning over multiple quarters.

Remediation segment margin pressure

Strategic wind-down of renewables created direct losses and reduced segment revenue, pressuring margins. If recoveries in higher‑margin replacement work are slow, consolidated margin targets may be harder to sustain, requiring cost discipline or new revenue to offset lost renewables contribution.

Montrose Environmental Group Business Overview & Revenue Model

Company Description

Montrose Environmental Group, Inc. operates as an environmental services company in the United States. The company operates in three segments: Assessment, Permitting and Response; Measurement and Analysis; and Remediation and Reuse. The Assessment, Permitting and Response segment provides scientific advisory and consulting services to support environmental assessments, environmental emergency response and recovery, toxicology consulting and environmental audits and permits for current operations, facility upgrades, new projects, decommissioning projects, and development projects. Its technical advisory and consulting services include regulatory compliance support and planning, environmental, and ecosystem and toxicological assessments and support during responses to environmental disruptions. The Measurement and Analysis segment tests and analyzes air, water, and soil to determine concentrations of contaminants, as well as the toxicological impact of contaminants on flora, fauna, and human health. Its services include source and ambient air testing and monitoring, leak detection, and advanced analytical laboratory services, such as air, storm water, wastewater, and drinking water analysis. The Remediation and Reuse segment provides engineering, design, implementation, and operations and maintenance services primarily to treat contaminated water, remove contaminants from soil, or create biogas from waste. It serves technology, media, chemical, energy, power and utility, industrial and manufacturing, financial, and engineering industries, as well as local, state, provincial, and federal government entities. The company was founded in 2012 and is headquartered in North Little Rock, Arkansas.

How the Company Makes Money

MEG primarily makes money by delivering fee-based environmental services under contracts with commercial and government clients. Revenue is generally generated through (1) professional services fees for consulting, engineering, and regulatory compliance advisory work (often billed as time-and-materials or fixed-fee project engagements), (2) field services revenue from measurement, sampling, monitoring, and testing activities (commonly tied to ongoing compliance programs and periodic monitoring requirements), and (3) project-based implementation work such as remediation, mitigation, and emergency response services (typically priced per project and influenced by scope, duration, and subcontractor/equipment needs). Additional revenue can come from recurring programs where clients retain MEG for ongoing environmental management, monitoring, or compliance support. MEG’s earnings are influenced by clients’ regulatory obligations (e.g., permitting, emissions and discharge monitoring, site assessment requirements), industrial activity levels, and public-sector environmental programs, which can drive steady demand for compliance and monitoring services. Information on any specific revenue-sharing partnerships, licensing/royalty income, or customer concentration is not available in the prompt; therefore: null.

Montrose Environmental Group Financial Statement Overview

Summary

Financials show a clear improvement trend: strong revenue growth, a swing to positive EBIT in 2025, sharply reduced leverage, and a step-change higher operating/free cash flow. The main constraint on a higher score is that net income remains slightly negative and cash flow has shown volatility year-to-year.

Income Statement

Revenue growth accelerated strongly in 2025 (annual revenue up ~51%) and gross margin held steady around ~40%, pointing to solid demand and pricing/contract quality. Profitability is improving meaningfully: EBIT swung to positive in 2025 after several years of operating losses, and EBITDA margin remains positive (~4–7% historically), but net income is still slightly negative in 2025 (about -0.6% margin). Overall, the trajectory is positive, yet the company still needs consistent bottom-line profitability to be considered higher quality.

Balance Sheet

Leverage improved sharply in 2025 with total debt reduced materially (from ~$281M to ~$82M) and debt-to-equity falling to ~0.18, a major de-risking versus prior years (~0.63–0.65). Equity is sizable (~$451M) relative to the asset base (~$981M), supporting financial flexibility. The main weakness is returns: losses persist, keeping return on equity negative despite the improved capital structure.

Cash Flow

Cash generation strengthened substantially in 2025, with operating cash flow at ~$107M and free cash flow at ~$92M, a large improvement from near-breakeven free cash flow in 2024. Free cash flow growth is very strong, indicating improving conversion and/or working-capital/capex dynamics. A key risk is volatility year-to-year (2024 was weak), and cash flow in 2025 appears outsized relative to still-negative net income, which can signal timing/one-off benefits even though it is favorable for liquidity.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	830.54M	696.39M	624.21M	544.42M	546.41M
Gross Profit	283.43M	278.20M	240.31M	192.53M	177.38M
EBITDA	81.70M	25.88M	31.93M	32.44M	40.96M
Net Income	-843.00K	-62.31M	-30.86M	-31.82M	-25.32M
Balance Sheet
Total Assets	981.30M	990.35M	816.79M	791.91M	833.09M
Cash, Cash Equivalents and Short-Term Investments	11.22M	12.94M	23.24M	89.83M	146.74M
Total Debt	359.03M	281.00M	210.34M	202.12M	205.77M
Total Liabilities	530.12M	544.09M	495.53M	478.73M	516.59M
Stockholders Equity	451.18M	446.26M	321.25M	313.19M	316.50M
Cash Flow
Free Cash Flow	91.16M	902.00K	23.09M	10.65M	30.00M
Operating Cash Flow	107.48M	22.23M	56.02M	20.65M	37.58M
Investing Cash Flow	-15.84M	-138.04M	-101.62M	-38.69M	-71.64M
Financing Cash Flow	-93.12M	106.00M	-20.11M	-38.76M	146.10M

Montrose Environmental Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 23.55
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MEG, the sentiment is Negative. The current price of 23.55 is below the 20-day moving average (MA) of 25.43, below the 50-day MA of 24.42, and below the 200-day MA of 25.31, indicating a bearish trend. The MACD of 0.41 indicates Positive momentum. The RSI at 41.22 is Neutral, neither overbought nor oversold. The STOCH value of 6.18 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MEG.

Montrose Environmental Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MEG	74 Outperform	$847.34M	-1,034.44	-0.17%	―	22.77%	44.73%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
PESI	60 Neutral	$242.21M	-25.42	-19.87%	―	-9.64%	40.01%
QRHC	46 Neutral	$22.43M	-2.54	-44.35%	―	-9.25%	-189.37%
NVRI	45 Neutral	$1.47B	-8.63	-38.53%	―	-2.91%	-67.18%
LNZA	41 Neutral	$31.95M	4.97	-696.09%	―	-31.28%	42.94%

Montrose Environmental Group Corporate Events

Montrose Environmental Posts Record 2025 Results, Issues 2026 Outlook

Montrose Environmental Group reported that for the full year 2025, ended December 31, it achieved record revenue of $830.5 million, up 19.3% from 2024, driven by 12.7% organic growth, stronger environmental emergency response work, and prior-year acquisitions. The company sharply reduced its net loss to $0.8 million from $62.3 million, grew Consolidated Adjusted EBITDA by 21.3% to $116.2 million with margins rising to 14.0%, generated $107.5 million of operating cash flow and $87.0 million of free cash flow, and lowered leverage to 2.5x following full redemption of its Series A-2 preferred stock in 2025.

Fourth-quarter 2025 revenue rose 2.2% year over year to $193.3 million, as strong organic growth in the Assessment, Permitting and Response segment offset weaker Measurement and Analysis results and lower emergency response revenue. Quarterly net loss improved to $8.2 million from $28.2 million, though Consolidated Adjusted EBITDA and margins declined due to segment mix and lower margins in Measurement and Analysis and Remediation and Reuse.

Management underscored that the 2025 performance exceeded major objectives, including 13% organic revenue growth, expanded EBITDA margins, and 75% free cash flow conversion, helping reduce year-end leverage roughly 0.5x below initial forecasts. The company also highlighted accelerated cross-selling, expansion of its IP portfolio, and talent additions as positioning it well for 2026 and beyond.

For 2026, Montrose issued guidance for revenue between $840 million and $900 million, implying about 8% organic growth at the midpoint and including $50 million to $70 million of expected emergency response revenue. It projected Consolidated Adjusted EBITDA of $125 million to $130 million, targeting roughly 15% EBITDA margin and about a 100-basis-point margin expansion versus 2025, excluding any benefit from future acquisitions.

The company plans to resume smaller, bolt-on, highly accretive acquisitions in 2026, subject to valuation, capital allocation priorities, and leverage constraints. Management intends to convert at least 60% of Consolidated Adjusted EBITDA to operating cash flow in 2026 and to deploy cash toward organic growth, capital expenditures, acquisitions, and share repurchases while maintaining a prudent balance sheet and leverage profile.

The most recent analyst rating on (MEG) stock is a Hold with a $24.00 price target. To see the full list of analyst forecasts on Montrose Environmental Group stock, see the MEG Stock Forecast page.

Montrose Environmental Group Appoints New Chief Operating Officer

On January 20, 2026, Montrose Environmental Group announced that it had appointed industry veteran James Laws as Chief Operating Officer, effective January 19, 2026, bringing in a leader with 25 years of environmental sector experience and a track record overseeing large operational teams at AECOM and CH2M Hill. Under an at-will employment offer, Laws will receive a $525,000 base salary, be eligible for an annual performance bonus of up to 100% of salary, and be granted $500,000 in restricted stock units vesting over three years, signaling Montrose’s intent to strengthen its operational leadership bench and align executive incentives with company performance while clarifying there are no related-party or conflict-of-interest concerns tied to his appointment.

The most recent analyst rating on (MEG) stock is a Buy with a $24.50 price target. To see the full list of analyst forecasts on Montrose Environmental Group stock, see the MEG Stock Forecast page.