Montrose Environmental Group Inc (MEG, Financial), a prominent player in the waste management industry, has experienced a significant fluctuation in its stock price recently. With a market capitalization of $1.23 billion, the company's shares are currently trading at $40. Over the past week, MEG's stock has seen a decline of 15.61%, yet when looking at the broader picture, the stock has surged by an impressive 38.54% over the past three months. This recent performance has caught the attention of investors and market analysts alike.
According to GuruFocus's valuation metrics, Montrose Environmental Group is currently modestly undervalued with a GF Value of $49.68, up from the past GF Value of $48.85. This suggests a positive shift in the company's intrinsic value, as defined by GuruFocus.com, which calculates a stock's intrinsic value using historical multiples, past performance adjustments, and future business estimates. Three months ago, the stock was considered a possible value trap, indicating that investors should think twice before investing. However, the current GF Valuation indicates a more favorable investment opportunity.
Understanding Montrose Environmental Group
Montrose Environmental Group Inc offers a comprehensive range of environmental services. The company operates through three main segments: Assessment, Permitting and Response; Measurement and Analysis; and Remediation and Reuse. These services include environmental assessments, emergency response, audits, and treatment of contaminants. The company's expertise in air, water, and soil testing and analysis, as well as its ability to provide engineering and maintenance services for contaminant treatment and biogas creation, positions it as a key service provider in the United States, which contributes the majority of its revenue.
Profitability Analysis
Montrose Environmental Group's Profitability Rank stands at 4 out of 10, indicating challenges in maintaining consistent profitability. The company's Operating Margin is currently at -4.54%, which, while not ideal, is better than 21.55% of 232 companies in the industry. Similarly, the ROE (Return on Equity) is at -6.60%, surpassing 21.37% of its peers. The ROA (Return on Assets) and ROIC (Return on Invested Capital) are -3.81% and -3.91% respectively, indicating that the company is performing better than approximately 22% of its competitors in these metrics. These figures suggest that while Montrose Environmental Group has room for improvement, it is not significantly lagging behind its industry counterparts.
Growth Prospects
The company's Growth Rank is 3 out of 10, reflecting a mixed performance in terms of revenue and earnings growth. Montrose Environmental Group's 3-Year Revenue Growth Rate per Share is 1.40%, which is better than 33.82% of 207 companies in the industry. The 5-Year Revenue Growth Rate per Share is more impressive at 17.60%, outperforming 81.25% of its industry peers. However, the 3-Year EPS without NRI Growth Rate is a robust 35.70%, placing the company ahead of 83.91% of 174 companies. Despite these strong figures, the 5-Year EPS without NRI Growth Rate is at -8.70%, indicating some volatility in the company's earnings over a longer period. This mixed growth performance suggests that while Montrose Environmental Group has demonstrated the ability to grow, it has also faced challenges that have impacted its long-term earnings consistency.
Notable Shareholders
Montrose Environmental Group has attracted the attention of several notable investors. Ron Baron (Trades, Portfolio) holds the largest stake with 1,051,494 shares, representing 3.48% of the company. Chuck Royce (Trades, Portfolio) comes in second with 219,258 shares, accounting for 0.73%, followed by Ken Fisher (Trades, Portfolio) who owns 160,654 shares, making up 0.53% of the company. These significant investments by well-respected investors may signal confidence in the company's future prospects.
Competitive Landscape
When compared to its competitors, Montrose Environmental Group stands out with its $1.23 billion market cap. LanzaTech Global Inc (LNZA, Financial) has a market cap of $599.098 million, Enviri Corp (NVRI, Financial) is valued at $647.462 million, and Ambipar Emergency Response (AMBI, Financial) has a market cap of $254.977 million. This places Montrose Environmental Group at a higher valuation than these competitors, indicating a stronger market position within the waste management industry.
Conclusion
In summary, Montrose Environmental Group Inc has demonstrated a notable stock performance with a significant 38.54% increase over the past three months, despite a recent weekly decline. The company's current valuation suggests it is modestly undervalued, offering potential for investors. While profitability remains a challenge, the company's growth metrics, particularly in revenue and EPS growth over the short term, are commendable. The confidence shown by major shareholders and the company's competitive market cap compared to its peers further solidify its standing in the waste management sector. Investors should continue to monitor Montrose Environmental Group's performance, keeping an eye on both its growth potential and profitability improvements.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
