Artificial intelligence (AI) stocks continue to drive the market, experiencing hyper-growth this year. However, other concerns demand attention.

As the world deals with extreme climate change and environmental degradation, investors are paying closer attention to companies that are developing clean energy solutions. One company that stands out in the renewable energy sector is Ameresco (AMRC).

Founded in 2000, Ameresco provides energy efficiency and renewable energy solutions to businesses, institutions, and governments across North America and Europe.

Ameresco stock has fallen 28.6% year to date, while the S&P 500 Index ($SPX) has gained 8.7%. Nonetheless, Wall Street expects the stock to climb by 72% over the next 12 months. Furthermore, the Street-high estimate suggests a nearly 206% increase from current levels. With the stock down 78% from its all-time high, let’s find out if this is the right time to grab AMRC shares.

Ameresco Has a Profitable Business Model

Ameresco's business model is based on long-term contracts and recurring revenue streams, which provide investors with financial stability. The company has grown rapidly over the years, thanks to rising demand for sustainable energy solutions, and it has been a profitable business.

In the recently reported first quarter, total revenue increased 10.1% to $298.4 million, driven by an 11.5% increase in project revenues. According to management, "faster implementation and contract conversions" resulted in a 45% increase in contracted backlog for the quarter. Notably, the total project backlog crossed $4 billion at the end of Q1, versus $1 billion in the same period a year ago. Despite the growth, the company reported an adjusted net loss of $0.10 per share due to higher interest expenses in the quarter. 

At the end of the first quarter, the company had $77.7 million in cash and $268.1 million in corporate debt. Management anticipates a capital expenditure of $350 million to $400 million this year, the majority of which Ameresco plans to fund through project financing. 

CEO George Sakellaris stated, “Demand for our solutions continues to be strong and broad based across technologies and our diversified customer base. Additionally, our strong projects backlog metrics, together with our substantial asset portfolio and growing O&M backlog provide Ameresco with multi-year visibility on profitable revenue growth.”

Driven by a strong start to the year, management expects revenue to grow by 16% to 24% for the full year 2024, totaling $1.6 billion to $1.7 billion. Furthermore, adjusted earnings per share could arrive between $1.30 and $1.50, compared to $1.26 in 2023. 

Analysts tracking Ameresco predict revenue growth of 18.7% in 2024 and 12.9% in 2025. Similarly, the company's profit could be around $1.39 per share in 2024, up 10.3% year on year, before rising another 31.7% to $1.83 per share in 2025. 

Ameresco appears to be a reasonable buy right now, trading at 17 times forward earnings estimates for 2024.

What Do Analysts Say About Ameresco Stock?

Following its Q1 earnings, Craig-Hallum analyst Eric Stine reiterated his “buy” rating for AMRC stock.

Ameresco stock has a consensus “strong buy” rating. Out of the 13 analysts covering the stock, six advise a “strong buy,” one suggests a “moderate buy,” and the remaining three maintain a “hold” rating. 

The average target price for the stock is $38.45, implying a 72% increase from current levels. Furthermore, it has a high target price of $68, which implies a massive 206% gain over the next year. 

The Bottom Line on Ameresco Stock

Ameresco is an appealing investment opportunity for those seeking exposure to the renewable energy sector. Given its proven track record, consistent revenue growth, diverse and profitable business model, and commitment to sustainability, Ameresco is well-positioned to capitalize on the shift to a cleaner energy future.

With the stock down from its all-time high, this just might be the right time to grab this growth stock now.