One Engineering Services Stock to Book Profit On - AMRC

Ameresco, Inc.

AMRC Details

Ameresco, Inc. (NYSE: AMRC) is a clean technology integrator with a portfolio of energy efficiency and renewable energy supply solutions. The company develops, designs, arrange finances, constructs, and installs energy solution.

Financial Performance for the Year Ended 31 December 2021 – (FY21)

• Revenues stood at $1.2 billion, up 18% YoY, primarily driven by the strength in project business by the Southern California Edison (SCE) design/build contract, followed by a solid performance from Energy Asset and O&M businesses.
• Net income attributable to common shareholders stood at $70.5 million, up 30% YoY, mainly due to broad-based growth across all business lines.
• GAAP EPS stood at $1.35, up 23% YoY and Non-GAAP EPS stood at $1.51, up 28% YoY
• Adjusted EBITDA stood at $152.7 million, up 30% YoY.

Source: Company Reports, Analysis by Kalkine Group

Key Updates

• On 23 March 2022, the company hosted its Investor Day, where management discussed key growth opportunities highlighting the portfolio of innovative solutions, integrated business model and long-term growth opportunities.

Outlook

The company expects that 2022 will be a record year as the addressable markets continue to expand, mainly led by robust long term industry growth trends. These trends with technological expertise and a proven track record are expected to benefit the company.

Key Risks

In H2FY21, the company experienced supply chain disruptions resulting in delays in material delivery to customers. The company typically faces a long variable selling cycle that demands significant resource commitments with prolonged lead time before revenue realization for securing new project contracts.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Stock Recommendation

The company has delivered a 6-month and one-year return of ~+32.40% and ~+105.17%, respectively. The stock is trading higher than the average price of the 52-week low-high range at $40.33–$101.83, respectively.

The stock has been valued using EV/Sales multiple based relative valuation (on an illustrative basis). The target price so arrived reflects a fall of low double-digit (in % terms). A slight discount has been applied to peer average EV/Sales multiple (NTM basis), considering the risk of supply chain disruptions resulting in more extended gestation periods.

Considering the aforementioned factors, the current trading levels, and the associated business risks, we advise the investors to book profit. We give a “Sell” rating on the stock at the closing market price of $83.31 per share, as on 09:38 am New York Time, USA (GMT-4) as of 25th March 2022.

Technical Overview

Daily Price Chart

Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)

Ameresco, Inc. (AMRC) is a part of Kalkine’s Global Green Energy Product

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.