Montrose Environmental Group (MEG) AI Stock Analysis

• Market Cap: $750.70M
• Dividend Yield: N/A
• Average Volume (3M): 388.76K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.38
• Revenue Growth: 10.92%
• EPS Growth: -57.13%
• Country: US
• Employees: 3,400
• Sector: Industrials
• Sector Strength: 86
• Industry: Waste Management
• EPS (TTM): -0.64
• Shares Outstanding: 34,216,240
• 10 Day Avg. Volume: 474,684
• 30 Day Avg. Volume: 388,763
• PEG Ratio: -3.28
• Price to Book (P/B): 2.83
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 123.78
• Enterprise Value/Market Cap: 1.91
• Enterprise Value/Revenue: 0.52
• Enterprise Value/Gross Profit: 5.18
• Enterprise Value/Ebitda: 12.60
• 1Y Price Target: $28.33
• Price Target Upside: 26.47% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 68 Neutral
• Price Target: $26.00 ▲(16.07%Upside)

Montrose Environmental Group's overall stock score reflects robust revenue growth and strong cash flow improvements, bolstered by positive earnings call sentiment and strategic initiatives like the stock repurchase program. However, persistent profitability challenges and valuation concerns due to negative earnings impact the score. Technical indicators suggest current bullish momentum, but caution is warranted due to overbought conditions.

Positive Factors

Business Momentum

Positive business momentum supports guidance outlook, with potential upside due to unconsidered opportunities.

Market Valuation

Shares of Montrose are viewed as undervalued and the expectation is that the valuation will recover over time as the company continues to execute on its long-term framework for high-single-digit core organic growth.

Revenue Performance

First-quarter results came in well ahead of expectations, with revenue of $178 million above consensus of $168 million, and adjusted EBITDA of $19.0 million above consensus of $15.8 million.

Negative Factors

Market Performance

Montrose Environmental Group shares have been significant under-performers over much of the past nine months.

Stock Performance

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.

Montrose Environmental Group Business Overview & Revenue Model

Company Description

Montrose Environmental Group (MEG) is a leading environmental services company that operates across various sectors, including air quality, environmental laboratory services, regulatory compliance, and environmental consulting. The company provides a broad range of services aimed at supporting clients in navigating environmental regulations, mitigating environmental risks, and managing their environmental impact. MEG's offerings include air quality testing, emissions measurement, environmental laboratory analysis, and remediation consulting, among others.

How the Company Makes Money

Montrose Environmental Group generates revenue through a diverse set of environmental services tailored to meet the needs of industrial, governmental, and commercial clients. Key revenue streams include consulting fees for environmental compliance and strategy, laboratory testing and analysis fees, and project management fees for remediation and mitigation projects. The company also benefits from long-term contracts and partnerships with various federal and state agencies, as well as private sector clients, which provide a steady stream of income. Significant factors contributing to MEG's earnings include its expertise in air quality management and regulatory compliance, as well as its ability to provide comprehensive solutions that integrate technology and innovation to address complex environmental challenges.

Montrose Environmental Group Financial Statement Overview

Summary

Montrose Environmental Group shows strong revenue growth and improved cash flow, but profitability issues with negative net and EBIT margins persist, impacting overall financial stability.

Income Statement

Montrose Environmental Group's revenue has shown consistent growth, with a TTM (Trailing-Twelve-Months) increase of 3.2% compared to the previous year. Gross profit margin stands at 38.4%, reflecting strong cost management. However, persistent negative net and EBIT margins indicate ongoing profitability challenges, with the TTM net profit margin at -9.9% and EBIT margin at -5.0%. The company needs to address its operational inefficiencies to improve bottom-line results.

Balance Sheet

The company maintains a moderate debt-to-equity ratio of 0.68, indicating a balanced approach to leveraging. However, the return on equity is negative due to sustained net losses, and the equity ratio stands at 44.8%, showing a reasonable level of financial stability. Improving profitability could enhance overall financial health.

Cash Flow

Free cash flow has grown significantly, from $902,000 in 2024 to $30.05 million TTM, representing a robust growth trajectory. The operating cash flow to net income ratio of -0.70 suggests that cash flows are less volatile than reported earnings, indicating good cash management. Enhanced free cash flow to net income ratio also supports liquidity improvement.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	718.90M	696.39M	624.21M	544.42M	546.41M	328.24M
Gross Profit	276.35M	278.20M	240.31M	192.53M	177.38M	112.75M
EBITDA	10.15M	25.88M	31.93M	32.44M	36.91M	-7.41M
Net Income	-71.07M	-62.31M	-30.86M	-31.82M	-25.32M	-57.95M
Balance Sheet
Total Assets	992.16M	990.35M	816.79M	791.91M	833.09M	602.73M
Cash, Cash Equivalents and Short-Term Investments	30.28M	12.94M	23.24M	89.83M	146.25M	34.39M
Total Debt	300.64M	281.00M	210.34M	202.12M	205.77M	175.90M
Total Liabilities	548.02M	544.09M	342.61M	325.80M	363.67M	312.65M
Stockholders Equity	444.14M	446.26M	474.18M	466.12M	469.43M	290.07M
Cash Flow
Free Cash Flow	30.05M	902.00K	23.09M	10.65M	30.00M	-5.93M
Operating Cash Flow	49.76M	22.23M	56.02M	20.65M	37.58M	1.85M
Investing Cash Flow	-76.71M	-138.04M	-101.62M	-38.69M	-71.64M	-179.74M
Financing Cash Flow	48.62M	106.00M	-20.11M	-38.76M	146.10M	205.90M

Montrose Environmental Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 22.40
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 22.4 is above the 20-day moving average (MA) of 22.02, above the 50-day MA of 19.27, and above the 200-day MA of 19.96, indicating a neutral trend. The MACD of 0.67 indicates Positive momentum. The RSI at 55.88 is Neutral, neither overbought nor oversold. The STOCH value of 40.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MEG.

Montrose Environmental Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CWST	72 Outperform	$7.08B	508.85	1.00%	―	21.63%	-30.27%
MEG	68 Neutral	$750.70M	―	-14.32%	―	10.92%	-57.13%
NVRI	60 Neutral	$705.96M	―	-26.25%	―	5.42%	-29.97%
Sector *	58 Neutral	$1.34B	4.20	-2.93%	7.41%	3.67%	-51.13%
PESI	54 Neutral	$198.28M	―	-41.10%	―	-28.62%	-543.45%
QRHC	48 Neutral	$40.95M	―	-44.84%	―	-0.91%	-305.99%

Montrose Environmental Group Corporate Events

Montrose Environmental Group Holds Annual Stockholders Meeting

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.

Montrose Environmental Group Reports Record Q1 Results

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.