How Recent Stock Volatility Shapes the Outlook for Montrose Environmental Group in 2025

So, you are eyeing Montrose Environmental Group and trying to decide whether this is the moment to buy, hold, or take profits off the table. You are not alone. With the stock closing recently at $28.09, many investors are wondering if the company’s best days are ahead or if the risks loom larger now than they did at the start of the year.

The story of Montrose’s share price is, frankly, a rollercoaster. In just the past year, the stock is up 6.2%, but that modest gain masks some serious ups and downs. After a rough patch—down 7.9% over the past month and dropping 1.0% in the last week alone—some might be feeling a bit anxious. Still, those who jumped in earlier in the year have seen the stock surge by an impressive 50.0% since January. Over three years, though, the picture is less rosy, with shares down 26.8%, barely breaking even over a five-year stretch at 0.2% growth. With broader market news highlighting ongoing interest in environmental services but also increased scrutiny around sector valuations, these moves start to make a little more sense.

Of course, price swings are only part of the story. When we zoom in on the company’s fundamentals using classic valuation models, Montrose comes out as undervalued in 2 out of 6 key checks, giving it a valuation score of 2. That is good, but hardly a slam dunk and definitely calls for a closer look at how those models compare. Next, let’s explore what each major valuation approach tells us. Stay tuned, because at the end I will share a smarter, more holistic way to understand what this stock is really worth.

Montrose Environmental Group scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Montrose Environmental Group Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company is worth today based on its future cash flows. It does this by projecting the money Montrose Environmental Group could generate over coming years and then discounting those figures back to the present using a risk-adjusted rate. The idea is that money expected in the future is worth less than the same amount today.

Currently, Montrose Environmental Group’s Free Cash Flow stands at $43.0 Million. Analysts project this figure will grow by around 5% per year over the next few years, and in ten years’ time, estimates suggest Free Cash Flow will reach roughly $67.1 Million. The further out the projection, the more Simply Wall St relies on its own methods to extrapolate trends beyond where analyst coverage stops. All figures are in US dollars.

Rolling these numbers up, the DCF calculation arrives at an intrinsic or "fair" value of $32.68 per share. With the stock currently priced at $28.09, that implies the shares are trading about 14.0% below their estimated fair value. This suggests the stock is undervalued at current levels.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Montrose Environmental Group.

Our Discounted Cash Flow (DCF) analysis suggests Montrose Environmental Group is undervalued by 14.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Montrose Environmental Group Price vs Sales

The Price-to-Sales (P/S) ratio is commonly used to value companies, especially those that are still growing and may not consistently report profits. It provides a clear picture of how much investors are willing to pay for each dollar of a company’s sales and is widely considered a helpful tool for assessing unprofitable or early-stage businesses.

Growth expectations and risk are important in determining what counts as a “normal” or “fair” P/S ratio. Faster-growing companies or those with more predictable future sales typically command higher P/S ratios. Those with higher risks or slower growth trends tend to trade at lower ratios.

Currently, Montrose Environmental Group holds a P/S ratio of 1.27x. For context, the average among its industry peers is 0.99x, and the broader Commercial Services industry average is about 1.51x. This means Montrose trades above its direct peer group but below the overall industry’s average.

To go a step further, Simply Wall St calculates a proprietary "Fair Ratio" for Montrose — in this case, 1.17x — tailored to Montrose’s growth rates, profit margins, market capitalization and sector dynamics. This metric goes beyond just looking at averages, as it systematically considers the company’s specific potential and risks rather than applying a blanket standard.

Comparing Montrose’s current P/S ratio (1.27x) to the Fair Ratio (1.17x), the stock trades only slightly above its calculated fair value. Given the small difference, Montrose Environmental Group’s shares appear to be valued about right at today’s level.

Result: ABOUT RIGHT

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Montrose Environmental Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. Narratives combine your perspective on a company—your “story” about its prospects, strengths, and risks—with a financial forecast, letting you link Montrose Environmental Group’s business drivers directly to revenue, earnings, margin estimates, and a fair value calculation.

Think of a Narrative as an easy-to-use tool available on Simply Wall St’s Community page, where millions of investors actively compare stories and forecasts. Instead of relying only on expert models, you can build your own view by projecting how factors like climate regulation or market expansion might impact Montrose, and immediately see how that changes what you believe the stock is worth.

Narratives help you decide whether to buy, hold, or sell by letting you compare the fair value from your story to the current market price. Because they are automatically updated as new events (like earnings releases or major news) arrive, your view always stays relevant.

For example, some investors see Montrose as poised for solid long-term growth due to global climate investment and set their fair value near $33.00. Others focus on earnings volatility and regulatory risks, resulting in more cautious estimates as low as $26.00 per share. Now you can clearly see which story you believe, and make smarter investment decisions, faster.

Do you think there's more to the story for Montrose Environmental Group? Create your own Narrative to let the Community know!

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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