Montrose Environmental Group (MEG) AI Stock Analysis

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Montrose Environmental Group

(NYSE:MEG)

Rating:64Neutral

Price Target:

$20.50

▼(-1.35%Downside)

Montrose Environmental Group shows strong revenue growth and cash flow improvements, with positive guidance and strategic initiatives such as a stock repurchase program. However, ongoing profitability challenges and high valuation risk weigh on the stock's potential. Technical analysis indicates moderate bullish momentum but caution due to the approaching overbought RSI level. Overall, while there are positive operational trends, financial and valuation concerns moderate the stock's attractiveness.

Positive Factors

Business Momentum

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

Financial 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.

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

Market 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.

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

$711.01M

Dividend YieldN/A

Average Volume (3M)385.63K

Price to Earnings (P/E)―

Beta (1Y)1.38

Revenue Growth10.92%

EPS Growth-57.13%

CountryUS

Employees3,400

SectorIndustrials

Sector Strength94

IndustryWaste Management

Share Statistics

EPS (TTM)-0.64

Shares Outstanding34,216,240

10 Day Avg. Volume320,110

30 Day Avg. Volume385,625

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 Cap1.23

Enterprise Value/Revenue0.33

Enterprise Value/Gross Profit3.30

Enterprise Value/Ebitda6.32

Forecast

1Y Price Target

$27.20

Price Target Upside30.90% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Montrose Environmental Group Business Overview & Revenue Model

Company DescriptionMontrose 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 MoneyMontrose 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 Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: 38.07%|

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 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

Neutral

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.

Balance Sheet

Neutral

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.

Cash Flow

Negative

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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

Technical Analysis Sentiment

Positive

Last Price20.78

Price Trends

50DMA

16.17

Positive

100DMA

17.77

Positive

200DMA

20.80

Negative

Market Momentum

MACD

1.17

Positive

RSI

65.59

Neutral

STOCH

75.00

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 20.78 is above the 20-day moving average (MA) of 19.26, above the 50-day MA of 16.17, and below the 200-day MA of 20.80, indicating a neutral trend. The MACD of 1.17 indicates Positive momentum. The RSI at 65.59 is Neutral, neither overbought nor oversold. The STOCH value of 75.00 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 (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CWST	68 Neutral	$7.42B	528.64	1.00%	―	21.63%	-30.27%
Sector *	66 Neutral	$4.48B	12.24	5.32%	248.54%	4.09%	-12.10%
MEG	64 Neutral	$711.01M	―	-14.32%	―	10.92%	-57.13%
NVRI	60 Neutral	$656.86M	―	-26.25%	―	5.42%	-29.97%
PESI	47 Neutral	$181.86M	―	-41.10%	―	-28.62%	-543.45%
QRHC	46 Neutral	$46.43M	―	-44.84%	―	-0.91%	-305.99%

* Industrials Sector Average

Performance Comparison

MEG

Montrose Environmental Group

20.47

-24.33

-54.31%

CWST

Casella Waste

117.10

20.63

21.38%

NVRI

Enviri

8.13

-0.78

-8.75%

PESI

Perma-Fix

10.27

0.21

2.09%

QRHC

Quest Resource

2.24

-6.59

-74.63%

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.

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.