Ameresco (AMRC) Misses by 7 Cents: Look to Buy on Any Sell-off

While the headline was disappointing, President and CEO George Sakellaris confidently reaffirmed revenue guidence for the rest of the year, saying that he expected 2012 revenues to be heavily back loaded. Sakellaris predicts the second half to account for 60-62 percent of 2012 revenues, compared to 38-40 percent for the first half of the 2012.

Longer term, he expects Ameresco to continue its strong growth, with operating margin strengthening towards 20% over the longer term.

Strong revenue growth is coming from contract with the federal government. While Ameresco received only $2 million worth of awards in the whole of 2011, they have already been awarded $20 worth of contracts in 2012. Sakellaris commented that Ameresco has found it hard keeping up with federal demand so far this year.

These new contracts (up 50 percent over Q1 2011) helped grow Ameresco’s backlog by 10 percent compared to last year. While such new contracts will not begin producing revenue until 2013 at the earliest, they should give investors confidence that Ameresco’s long term growth potential is still in place. Ameresco’s revenues should continue to grow 20 percent year over year, despite the poor earnings performance this quarter.

Conclusion

This mornings’ earnings miss may cause a sell-off over the next day or two. Investors should take the opportunity to add to their positions in this sustainable company which has low exposure to expiring renewable energy subsidies.

Note: This article was first published on the author's Forbes.com blog on May 8th, and AltEnergy Stocks, when Ameresco was trading at $11.70. Click here for an up-to-date quote.

Disclosure: Long AMRC.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results. This article contains the current opinions of the author and such opinions are subject to change without notice. This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.


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