Ameresco Shares Dropped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: After yesterday's broad market sell-off, stocks are rebounding around the globe -- but not at Ameresco (NYS: AMRC) , where share prices fell as far as 20% in early trading today. (They're back up to just a 6% loss now, thank goodness.)

So what: What caused the sell-off? Well, there's no bad news to report ... yet. But Ameresco is set to report earnings on Wednesday. My guess: Investors aren't sticking around if there's even a chance they might get walloped over bad earnings.

Now what: I can't blame them. Sure, on the surface, everything looks peachy-keen, jellybean at this "energy efficiency solutions" provider -- 15 P/E stock, 21% estimated growth rate. Can't beat that -- what worries me is what lies beneath. Ameresco's cash flow statement shows that over the last four reported quarters, this company burned through more than $27 million in negative free cash flow, even as it was claiming GAAP profits of more than $32 million.

Personally, I'm a fan of companies that generate more cash than they claim as profits -- not less. And for that reason, I'm not a fan of Ameresco.

Willing to wait around and hear what Ameresco has to say before selling?Add Ameresco to your Fool watchlist. Make sure you're first in line to hear the news when Ameresco reports Wednesday.

At the time thisarticle was published Fool contributorRich Smithdoes not own (or short) shares of Ameresco. The Motley Fool has adisclosure policy.Motley Fool newsletter serviceshave recommended buying shares of Ameresco. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.