BrightView (BV)

Landscaping service company BrightView (NYSE:BV) reported Q1 CY2025 results exceeding the market’s revenue expectations, but sales fell by 1.5% year on year to $662.6 million. The company’s full-year revenue guidance of $2.80 billion at the midpoint came in 0.8% above analysts’ estimates. Its non-GAAP profit of $0.14 per share was 27% above analysts’ consensus estimates.

Company Overview

An official field consultant for Major League Baseball, BrightView (NYSE:BV) offers landscaping design, development, and maintenance.

Many facility services are non-discretionary (office building bathrooms need to be cleaned), recurring, and performed through contracts. This makes for more predictable and stickier revenue streams. However, COVID changed the game regarding commercial real estate, and office vacancies remain high as hybrid work seems here to stay. This is a headwind for demand, and facility services companies are also at the whim of economic cycles. Interest rates, for example, can greatly impact commercial construction projects that drive incremental demand for these companies’ services.

Competitors offering similar products include Scotts Miracle-Gro (NYSE:SMG), SiteOne (NYSE:SITE), and TruGreen (private).

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, BrightView grew its sales at a sluggish 2.5% compounded annual growth rate. This was below our standards and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. BrightView’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

This quarter, BrightView’s revenue fell by 1.5% year on year to $662.6 million but beat Wall Street’s estimates by 2.5%.

Looking ahead, sell-side analysts expect revenue to grow 3.5% over the next 12 months. While this projection implies its newer products and services will catalyze better top-line performance, it is still below average for the sector.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

BrightView has bad unit economics for an industrials company, giving it less room to reinvest and develop new offerings. As you can see below, it averaged a 24.2% gross margin over the last five years. Said differently, BrightView had to pay a chunky $75.77 to its suppliers for every $100 in revenue.

This quarter, BrightView’s gross profit margin was 22.3%, in line with the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

BrightView was profitable over the last five years but held back by its large cost base. Its average operating margin of 3.6% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, BrightView’s operating margin rose by 3 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, BrightView generated an operating profit margin of 3.4%, down 5.9 percentage points year on year. Since BrightView’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

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 BrightView, its EPS declined by 2.9% annually over the last five years while its revenue grew by 2.5%. We can see the difference stemmed from higher interest expenses or taxes as the company actually grew its operating margin and repurchased its shares during this time.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

BrightView’s two-year annual EPS growth of 11% was good and topped its flat revenue.

In Q1, BrightView reported EPS at $0.14, up from $0.08 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 BrightView’s full-year EPS of $0.88 to grow 1.4%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

BrightView has shown weak cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4%, subpar for an industrials business.

Taking a step back, we can see that BrightView’s margin dropped by 4 percentage points during that time. This along with its unexciting margin put the company in a tough spot, and shareholders are likely hoping it can reverse course. If the trend continues, it could signal it’s becoming a more capital-intensive business.

BrightView’s free cash flow clocked in at $57.7 million in Q1, equivalent to a 8.7% margin. The company’s cash profitability regressed as it was 2 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, leading to short-term swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

BrightView historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 2.3%, lower than the typical cost of capital (how much it costs to raise money) for industrials companies.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, BrightView’s ROIC averaged 3.5 percentage point increases each year. This is a good sign, and we hope the company can continue improving.

BrightView reported $141.3 million of cash and $880.8 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $321.5 million of EBITDA over the last 12 months, we view BrightView’s 2.3× net-debt-to-EBITDA ratio as safe. We also see its $30.7 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly BrightView blew past analysts’ EPS expectations this quarter. We were also glad its full-year EBITDA guidance exceeded Wall Street’s estimates. On the other hand, its EBITDA missed significantly. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 4.7% to $15.22 immediately following the results.

Updated: June 14, 2025 at 11:32 PM EDT

Before making an investment decision, investors should account for BrightView’s business fundamentals and valuation in addition to what happened in the latest quarter.

BrightView falls short of our quality standards. For starters, its revenue growth was weak over the last five years, and analysts don’t see anything changing over the next 12 months. And while its expanding operating margin shows the business has become more efficient, the downside is its relatively low ROIC suggests management has struggled to find compelling investment opportunities. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

BrightView’s P/E ratio based on the next 12 months is 17.4x. This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $19.61 on the company (compared to the current share price of $15.52).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.