Two Reasons to Like MEG and One to Stay Skeptical

January 03, 2025 at 04:06 AM EST

MEG Cover Image

Montrose has gotten torched over the last six months - since July 2024, its stock price has dropped 54.4% to $18.29 per share. This may have investors wondering how to approach the situation.

Given the weaker price action, is now a good time to buy MEG? Find out in our full research report, it’s free.

Why Does Montrose Spark Debate?

Founded to protect a tree-lined two-lane road, Montrose (NYSE: MEG) provides air quality monitoring, environmental laboratory testing, compliance, and environmental consulting services.

Two Things to Like:

1. Skyrocketing Revenue Shows Strong Momentum

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Montrose grew its sales at an incredible 25.4% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers. Montrose Quarterly Revenue

2. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Montrose’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.

Montrose Trailing 12-Month EPS (Non-GAAP)

One Reason to be Careful:

Core Business Falling Behind as Demand Plateaus

Investors interested in Waste Management companies should track organic revenue in addition to reported revenue. This metric gives visibility into Montrose’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, Montrose failed to grow its organic revenue. This performance was underwhelming and implies it may need to improve its products, pricing, or go-to-market strategy. It also suggests Montrose might have to lean into acquisitions to accelerate growth, which isn’t ideal because M&A can be expensive and risky (integrations often disrupt focus). Montrose Organic Revenue Growth

Final Judgment

Montrose has huge potential even though it has some open questions. After the recent drawdown, the stock trades at 19.5× forward price-to-earnings (or $18.29 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More Than Montrose

The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market to cap off the year - and we’re zeroing in on the stocks that could benefit immensely.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,691% between September 2019 and September 2024) as well as under-the-radar businesses like United Rentals (+550% five-year return). Find your next big winner with StockStory today for free.

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