Energy and renewable energy projects company Ameresco (NYSE: AMRC) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 5% year on year to $526 million. On the other hand, the company’s full-year revenue guidance of $1.9 billion at the midpoint came in 0.5% below analysts’ estimates. Its non-GAAP profit of $0.35 per share was 15.4% above analysts’ consensus estimates.

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CEO George Sakellaris commented, “Third quarter results were excellent and kept us on track to hit our full year 2025 guidance ranges, while also further strengthening our long- term revenue visibility. We achieved solid year-on-year growth across our key business segments, reflecting increased demand and improved execution. Adjusted EBITDA growth outpaced revenue growth by a considerable margin, demonstrating the operating leverage we believe is inherent in the Ameresco business model. Demand for our energy infrastructure solutions remained robust, and we see our unique ability to offer flexible financial options to our customers as a strong selling point.

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

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Ameresco’s sales grew at an excellent 13% 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 22% 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 5%, and its $526 million of revenue exceeded Wall Street’s estimates by 1%.

Looking ahead, sell-side analysts expect revenue to grow 7.6% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and suggests the market is baking in some success for its newer products and services.

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Operating Margin

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 1.1 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 Q3, Ameresco generated an operating margin profit margin of 8.1%, up 1 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Ameresco’s EPS grew at a weak 3.3% compounded annual growth rate over the last five years, lower than its 13% annualized revenue growth. 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 expanded this quarter but declined by 1.1 percentage points over the last five years. Its share count also grew by 8.7%, 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 growth of 22.3% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q3, Ameresco reported adjusted EPS of $0.35, up from $0.32 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Ameresco’s full-year EPS of $1.39 to shrink by 28.6%.

Key Takeaways from Ameresco’s Q3 Results

We enjoyed seeing Ameresco beat analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its full-year EBITDA guidance slightly missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. The outlook is weighing on shares, and the stock traded down 3.3% to $38.70 immediately after reporting.

So do we think Ameresco is an attractive buy at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.