The renewable energy sector is at a pivotal inflection point, driven by the urgent need to decarbonize and the accelerating demand from industries like data centers, cleantech manufacturing, and direct air capture (DAC). Against this backdrop, Ameresco (AMRC) has positioned itself as a critical player in the energy transition, leveraging its expertise in energy efficiency, distributed energy resources, and project execution. But with the company’s stock trading at a discount to peers and its recent earnings results signaling both promise and caution, the question remains: Is AMRC undervalued, and how does its strategy align with the broader clean energy megatrends?

Ameresco’s Q1 2025 Earnings: Growth Amid Challenges

Ameresco’s first-quarter 2025 results, reported in April, underscored its resilience in a volatile market. Total revenue rose 18% year-over-year to $352.8 million, with the Projects segment (engineering, procurement, and construction) and Energy Assets (operational distributed energy systems) driving growth. The Projects segment saw a 23% increase to $251.5 million, while Energy Assets revenue jumped 31% to $56.7 million. However, the Other segment, which includes the recently divested AEG unit, declined due to the sale of its Advanced Energy Group business at year-end 2024.

Adjusted EBITDA surged 32% to $40.6 million, reflecting improved margins and operational efficiency. Yet, the company reported a net loss of $5.5 million, attributed to a $1.2 million tax expense and higher operating costs. The loss, however, was partially offset by strong cash flow visibility: total project backlog reached $4.9 billion (up 22%), with contracted backlog soaring 78% to $2.6 billion. This backlog, coupled with $3.3 billion in energy asset revenue visibility, positions Ameresco to meet its 2025 guidance of $1.9 billion in revenue and $235 million in adjusted EBITDA.

Valuation Metrics: A Tale of Relative Attractiveness

Ameresco’s valuation appears compelling when benchmarked against its peers. As of April 2025, its P/E ratio of 15.4x trailed the U.S. construction sector average of 32.9x and the peer average of 24.3x. This discount is even more striking given Ameresco’s 14.55% estimated earnings growth rate, which outpaces the negative growth of Great Lakes Dredge & Dock (GLDD) and the elevated P/E of Limbach Holdings (LMB at 46.3x).

The company’s EV/Revenue of 1.7x and EV/EBITDA of 17.3x also suggest a bargain compared to industry benchmarks, particularly for a firm with such robust revenue visibility. The PEG ratio of 1.1x—which factors in growth expectations—further indicates that the stock is fairly valued, if not slightly undervalued. Analysts’ 12-month price target of $22.11 (a 39% upside from its April closing price of $15.87) reinforces this narrative, albeit with some dispersion in consensus.

Strategic Position in the Clean Energy Megatrends

Ameresco’s business model is uniquely aligned with three dominant megatrends: decentralized energy systems, carbon management, and industrial decarbonization.

Decentralized Energy Systems: The rise of distributed energy resources (DERs)—such as solar, storage, and microgrids—is reshaping how energy is generated and consumed. Ameresco’s Energy Assets segment, which operates 742 MWe of systems, is capitalizing on this shift. With 618 MWe of assets in development and a $3.3 billion revenue visibility from power purchase agreements (PPAs), the company is well-positioned to benefit from the growing demand for localized, resilient energy solutions.

Carbon Management: The Inflation Reduction Act (IRA) and voluntary carbon markets are creating new revenue streams for renewable energy providers. Ameresco’s projects not only reduce emissions but also qualify for tax credits and carbon attributes, enhancing project economics. The company’s focus on high-integrity carbon management solutions—such as renewable-powered DAC—aligns with corporate sustainability goals and regulatory tailwinds.

Industrial Decarbonization: The energy transition is no longer confined to the power sector. Industries like data centers (driven by AI’s energy demands) and cleantech manufacturing are now major consumers of renewable energy. Ameresco’s expertise in large-scale EPC projects and energy-as-a-service models makes it a natural partner for these sectors. For instance, its work with federal agencies under Energy Savings Performance Contracts (ESPCs) provides stable cash flows and long-term visibility.

Risks and Macroeconomic Headwinds

Despite its strengths, Ameresco faces challenges. The U.S. solar industry, a key growth driver, is grappling with trade disputes and policy uncertainty. Recent tariffs on Southeast Asian solar modules and potential changes to IRA tax credits could delay projects. Additionally, Ameresco’s Q1 gross margin of 14.7% was slightly pressured by lower-margin EPC work in Europe, highlighting the need for margin discipline.

The company’s cash flow also remains a concern. While its 8-quarter rolling adjusted cash from operations averaged $33.4 million, Q1 saw a negative $28.3 million in operating cash flow, partially offset by $29.7 million in federal ESPC proceeds. Ameresco’s leverage ratio of 3.2x (debt-to-EBITDA) is manageable but leaves room for improvement.

Investment Implications

Ameresco’s combination of strong revenue growth, low valuation multiples, and alignment with clean energy megatrends makes it an intriguing candidate for investors seeking exposure to the energy transition. The stock’s current discount to peers suggests the market may be underestimating its long-term potential, particularly as it executes on its $10 billion in revenue visibility.

However, investors should monitor near-term risks, including policy shifts and supply chain disruptions. The company’s ability to maintain its 2025 guidance—especially in the second half, which accounts for 60% of its revenue—will be critical.

Final Thoughts: The energy transition is not a single narrative but a mosaic of interlocking trends. Ameresco, with its diversified business model and strategic agility, is well-placed to navigate this complexity. While its earnings report on August 4, 2025, will offer a snapshot of its progress, the broader story is one of undervaluation and long-term opportunity. For investors with a horizon beyond the next quarter, AMRC could represent a compelling bet on the future of energy.