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Montrose Environmental Group (MEG)
NYSE:MEG
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Montrose Environmental Group
(NYSE:MEG)
51Neutral
Positive Factors
Contract Opportunities
MEG was selected by the U.S. Air Force for a multi-year contract addressing environmental remediation of traditional and emerging contaminants, potentially worth as much as $1.5B over ten years.
Financial Performance
Montrose Environmental Group's reaffirmed outlook supports a strong fiscal performance for 2025.
Organic Growth
The company's guidance expects stronger demand in water treatment and energy/industrial production.
Negative Factors
Contract Impact
No purchase orders have been awarded yet by the Air Force, nor is there expected to be any financial impact in 2025 on whatever portion MEG potentially receives from initial work covered by the contract.
Perceived Risks
Shares of MEG have declined 30% relative to the 30-day average on perceived risks related to the new Trump administration, deregulation, and the ability to meet organic growth and free cash flow expectations.
Stock Performance
Montrose Environmental Group shares have been significant under-performers over much of the past nine months.
Montrose Environmental Group (MEG) vs. S&P 500 (SPY)
Market Cap
$512.33M
Dividend YieldN/A
Average Volume (3M)575.77K
Price to Earnings (P/E)―
Beta (1Y)1.38
Revenue Growth11.56%
EPS Growth-40.46%
CountryUS
Employees3,410
SectorIndustrials
Sector Strength78
IndustryWaste Management
Share Statistics
EPS (TTM)-2.21
Shares Outstanding34,663,597
10 Day Avg. Volume361,507
30 Day Avg. Volume575,775
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.95
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit3.58
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$30.60Price Target Upside107.04% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
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 exhibits strong revenue growth but faces persistent net losses and negative cash flow. The balance sheet shows moderate financial stability with low leverage, yet operational inefficiencies and high capital expenditures pose risks to financial health.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 |
| 76.18M | 210.34M | 202.12M | 205.77M | 175.90M | Net Debt |
| 63.24M | 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
Negative
14.78
Price Trends
15.60
Negative
17.53
Negative
22.34
Negative
Market Momentum
-0.03
Negative
50.84
Neutral
64.97
Neutral
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 14.78 is above the 20-day moving average (MA) of 13.80, below the 50-day MA of 15.60, and below the 200-day MA of 22.34, indicating a neutral trend. The MACD of -0.03 indicates Negative momentum. The RSI at 50.84 is Neutral, neither overbought nor oversold. The STOCH value of 64.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
64 Neutral | $7.45B | 523.33 | 1.05% | ― | 23.15% | -50.55% | |
63 Neutral | $4.21B | 11.55 | 5.28% | 250.72% | 4.13% | -9.42% | |
58 Neutral | $559.08M | ― | -26.55% | ― | 13.26% | -47.99% | |
51 Neutral | $512.33M | ― | -12.30% | ― | 11.56% | -40.46% | |
44 Neutral | $165.86M | ― | -38.46% | ― | -34.12% | -3803.38% | |
43 Neutral | $48.43M | ― | -25.01% | ― | 0.05% | -99.92% |
* Industrials Sector Average
Performance Comparison
MEG
Montrose Environmental Group
14.78
-29.49
-66.61%
CWST
Casella Waste
117.33
25.78
28.16%
NVRI
Enviri
6.97
-0.09
-1.27%
PESI
Perma-Fix
9.00
-3.74
-29.36%
QRHC
Quest Resource
2.35
-7.85
-76.96%
Montrose Environmental Group Earnings Call Summary
Earnings Call Date:Feb 26, 2025
(Q4-2024)
| % Change Since: -15.25%|
Next Earnings Date:May 07, 2025
Earnings Call Sentiment Neutral
Montrose Environmental Group achieved record revenue and strong organic growth in 2024, with significant international expansion and a solid financial position. However, challenges included lower environmental emergency response revenue and cash flow issues due to outstanding receivables. The overall sentiment is balanced, reflecting positive growth metrics alongside financial challenges.Q4-2024 Updates
Positive Updates
Record-Breaking Revenue and Growth
Montrose achieved 2024 revenue of $696.4 million and consolidated adjusted EBITDA of $95.8 million, both record highs. The company's revenue has grown at a 24% CAGR since 2019, with an adjusted EBITDA margin expansion of 120 basis points to 13.8%.
Strong Organic Growth and Customer Retention
The company reported robust organic revenue growth of 8.3% and a third consecutive year with a 96% revenue retention rate. Cross-selling improved to 53% of 2024 revenue, up from 51% in the prior year.
Positive International Performance
Approximately 20% of Montrose's revenue originated from Canada, Australia, and Europe, marking a significant increase from only 4% international revenue in 2021.
Solid Financial Position and New Credit Facility
Montrose's leverage ratio reduced to 2.1x, and they finalized a new credit agreement expanding borrowing capacity to $500 million with slightly lower interest rates.
Negative Updates
Environmental Emergency Response Revenue
The Environmental Emergency Response revenues were lower than expected, impacting overall segment performance.
Cash Flow Challenges
Full-year cash flow from operating activities was $22.2 million, down from $56 million in the prior year due to an increase in working capital and delayed payments.
Outstanding Receivables
There is an outstanding balance of approximately $13.5 million from a large U.S. government project with the city of Tustin, which is expected to be collected.
Company Guidance
During Montrose Environmental Group's fourth-quarter 2024 earnings call, the company provided guidance for 2025, anticipating revenue between $735 million and $785 million, and consolidated adjusted EBITDA ranging from $101 million to $108 million. This guidance reflects confidence in continued organic growth, projected at 7% to 9% annually, and improved margins. The company highlighted a 24% CAGR in revenue since 2019 and a consolidated adjusted EBITDA margin increase of 120 basis points to 13.8% in 2024. Montrose also emphasized its strong balance sheet with a leverage ratio of 2.1x and plans to optimize its capital structure by redeeming $60 million of preferred stock in April 2025 and the remaining $62 million by year-end. The company expects its cash flow conversion rate to exceed 50% and noted a third consecutive year of 96% revenue retention.Montrose Environmental Group Corporate Events
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.
Executive/Board ChangesRegulatory Filings and Compliance
Montrose Environmental Expands Board with New Appointment
Positive
Feb 20, 2025
On February 19, 2025, Montrose Environmental Group expanded its board of directors to ten members, appointing Mr. Vincent Colman as an independent Class III director. This move is expected to enhance the company’s governance and audit capabilities, as Mr. Colman, a recognized audit committee financial expert, joins the Audit Committee, further strengthening Montrose’s compliance and oversight functions.
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.