Energy and renewable energy projects company Ameresco (NYSE: AMRC) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 9.1% year on year to $581 million. The company’s full-year revenue guidance of $2.1 billion at the midpoint came in 0.5% above analysts’ estimates. Its non-GAAP profit of $0.39 per share was 9.2% above analysts’ consensus estimates.

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CEO George Sakellaris commented, “Strong fourth quarter results capped an excellent year for Ameresco in which we successfully navigated a dynamic business environment and reached the mid to high ends of our annual revenue and profit guidance ranges.

Company Overview

Having played a role in upgrading the energy solutions of Alcatraz Island, Ameresco (NYSE: AMRC) provides energy and renewable energy solutions for various sectors.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Ameresco’s sales grew at an excellent 13.4% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Ameresco’s annualized revenue growth of 18.6% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Ameresco reported year-on-year revenue growth of 9.1%, and its $581 million of revenue exceeded Wall Street’s estimates by 5%.

Looking ahead, sell-side analysts expect revenue to grow 7.5% over the next 12 months, a deceleration versus the last two years. Still, this projection is above the sector average and implies the market is forecasting some success for its newer products and services.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Ameresco was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.7% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, Ameresco’s operating margin decreased by 1.5 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Ameresco’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q4, Ameresco generated an operating margin profit margin of 6.8%, down 1.6 percentage points year on year. Conversely, its revenue and gross margin actually rose, so we can assume it was less efficient because its operating expenses like marketing, R&D, and administrative overhead grew faster than its revenue.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Ameresco, its EPS declined by 5.4% annually over the last five years while its revenue grew by 13.4%. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into Ameresco’s earnings to better understand the drivers of its performance. As we mentioned earlier, Ameresco’s operating margin declined by 1.5 percentage points over the last five years. Its share count also grew by 9.1%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Ameresco, its two-year annual EPS declines of 15.7% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q4, Ameresco reported adjusted EPS of $0.39, down from $0.88 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 9.2%. Over the next 12 months, Wall Street expects Ameresco’s full-year EPS of $0.90 to grow 22.2%.

Key Takeaways from Ameresco’s Q4 Results

We were impressed by how significantly Ameresco blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 3.5% to $32.02 immediately after reporting.

Sure, Ameresco had a solid quarter, but if we look at the bigger picture, is this stock a buy? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).