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When Will Montrose Environmental Group, Inc. (NYSE:MEG) Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at Montrose Environmental Group, Inc.'s (NYSE:MEG) future prospects. Montrose Environmental Group, Inc. operates as an environmental services company in the United States. With the latest financial year loss of US$107m and a trailing-twelve-month loss of US$39m, the US$2.3b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Montrose Environmental Group's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Montrose Environmental Group

According to the 7 industry analysts covering Montrose Environmental Group, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$1.3m in 2022. So, the company is predicted to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 109% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Montrose Environmental Group's upcoming projects, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

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One thing we would like to bring into light with Montrose Environmental Group is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Montrose Environmental Group's case is 70%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Montrose Environmental Group, so if you are interested in understanding the company at a deeper level, take a look at Montrose Environmental Group's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:

  1. Valuation: What is Montrose Environmental Group worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Montrose Environmental Group is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Montrose Environmental Group’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.