- If you are wondering whether Ameresco's current share price reflects its true worth, you are not alone. This article will walk through what the numbers are actually saying about value.
- Ameresco's stock has pulled back recently, with returns of a 3.9% decline over 7 days, a 26.7% decline over 30 days and a 19.4% decline year to date, even though the 1-year return sits at 134.4%, while 3-year and 5-year returns are a 42.7% decline and a 43.9% decline respectively.
- Recent news coverage around Ameresco has focused on its role as a clean energy solutions provider and how investors are reassessing companies exposed to energy efficiency, storage and related infrastructure. That backdrop helps frame why the share price has seen both sharp gains over 1 year and sizable pullbacks in shorter time frames.
- On Simply Wall St's valuation checklist, Ameresco has a value score of 2 out of 6. We will look at how different valuation approaches treat the stock, then finish with a way to interpret these models that can give you a clearer overall picture of value.
Ameresco scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Ameresco Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a business could be worth by projecting its future cash flows and then discounting those cash flows back to today using a required rate of return.
For Ameresco, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of $592.7 million, so the valuation leans heavily on future projections. Analyst based estimates feed into the early years, with Simply Wall St extrapolating further out. By 2030, free cash flow is projected at $73 million, with annual forecasts from 2026 to 2035 all below $100 million and expressed in today’s terms through discounting.
Putting all those discounted cash flows together gives an estimated intrinsic value of $10.26 per share. Compared with the current share price, the model implies the stock is 141.0% overvalued on this methodology.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Ameresco may be overvalued by 141.0%. Discover 47 high quality undervalued stocks or create your own screener to find better value opportunities.
Approach 2: Ameresco Price vs Earnings
For a profitable company, the P/E ratio is a useful yardstick because it links what you are paying directly to the earnings the business is generating today. Investors usually accept a higher P/E when they expect stronger growth or see lower risk, and prefer a lower P/E when growth expectations are more modest or risks are higher.
Ameresco is currently trading on a P/E of 29.58x. That sits below the Construction industry average of 33.24x and above the peer group average of 18.58x, so the market is assigning it a middle of the pack valuation compared with both broader industry and closer peers.
Simply Wall St’s Fair Ratio for Ameresco is 38.86x. This is a proprietary estimate of what a reasonable P/E could be for the company once its earnings growth profile, profit margins, industry, market cap and key risks are all taken into account. Because it adjusts for these company specific traits, the Fair Ratio can be more tailored than simply lining the stock up against industry or peer averages.
Comparing the Fair Ratio of 38.86x with the actual P/E of 29.58x suggests the shares are trading below that modelled level.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Ameresco Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way for you to connect your view of Ameresco’s story to concrete forecasts for revenue, earnings and margins, then to a Fair Value you can compare with today’s price.
On Simply Wall St’s Community page, Narratives let you set out your assumptions. For example, one Ameresco Narrative ties a higher Fair Value of about $59.06 to expectations for stronger earnings and a higher future P/E. Another, more cautious Narrative anchors Fair Value closer to $19.00 using lower margin and earnings assumptions.
By lining up these different Ameresco Narratives side by side, you can see how bullish and bearish investors are reading the same information differently. You can also check how each Fair Value compares with the current share price, and decide whether the gap between price and your chosen Narrative feels like a buy, hold or sell signal for you.
Because Narratives on Simply Wall St are updated when new earnings, guidance or news arrive, the story, the forecast and the Fair Value all move together. This means your decision making can stay closely aligned with what is happening at Ameresco in real time.
For Ameresco however we will make it really easy for you with previews of two leading Ameresco Narratives:
These sit on opposite sides of the debate, so you can quickly see what you would need to believe for each view to make sense and then decide which one is closer to your own expectations.
Fair value in this bullish narrative: US$59.06 per share
Implied discount vs current price: about 58% below this narrative fair value
Revenue growth assumption: about 12.0% per year
- Backlog conversion, higher margin international work and larger infrastructure projects are treated as key supports for gross margins, earnings quality and cash flow visibility.
- Recurring revenue from clean energy assets, especially battery storage and renewable natural gas, is expected to build over time and improve net margins and predictability.
- Data center power needs, microgrids, distributed energy projects and expanding European presence are seen as long term growth drivers that could justify a higher future P/E multiple.
Fair value in this bearish narrative: US$19.00 per share
Implied downside vs current price: about 30% above this narrative fair value
Revenue growth assumption: about 8.2% per year
- Higher interest rates, policy uncertainty and supply chain pressures are highlighted as risks for project demand, cost inflation and earnings stability.
- Customer concentration and tougher competition from larger players are seen as threats to market share, margins and the level of profitability that current pricing implies.
- This view assumes lower profit margins and more modest revenue growth, so it applies a fair value that sits well below the current share price and below bullish analyst targets.
Taken together, these two Narratives give you a clear range of outcomes for Ameresco, from a case where clean energy projects, data center power needs and recurring asset revenue support a much higher fair value, through to a case where financing costs, contract risk and competition point to a lower one. Your next step is to decide which assumptions feel more realistic and how much risk you are comfortable taking on at the current price.
Do you think there's more to the story for Ameresco? Head over to our Community to see what others are saying!
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.
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