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Energy Recovery (ERII)
NASDAQ:ERII
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Energy Recovery
(NASDAQ:ERII)
64Neutral
Energy Recovery (ERII) vs. S&P 500 (SPY)
Market Cap
$717.21M
Dividend YieldN/A
Average Volume (3M)574.06K
Price to Earnings (P/E)36.1
Beta (1Y)1.42
Revenue Growth10.93%
EPS Growth6.99%
CountryUS
Employees254
SectorIndustrials
Sector Strength91
IndustryIndustrial - Pollution & Treatment Controls
Share Statistics
EPS (TTM)-0.18
Shares Outstanding54,499,226
10 Day Avg. Volume849,699
30 Day Avg. Volume574,063
Financial Highlights & Ratios
PEG Ratio1.63
Price to Book (P/B)3.07
Price to Sales (P/S)0.00
P/FCF Ratio32.23
Enterprise Value/Market Cap0.84
Enterprise Value/Revenue1.11
Enterprise Value/Gross Profit6.20
Enterprise Value/Ebitda6.29
Forecast
1Y Price Target
$17.25Price Target Upside31.08% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Energy Recovery Business Overview & Revenue Model
Company DescriptionEnergy Recovery, Inc., together with its subsidiaries, designs, manufactures, and sells various solutions for the seawater reverse osmosis desalination and industrial wastewater treatment industries worldwide. The company operates through Water and Emerging Technologies segments. It offers a suite of products, including energy recovery devices, and high-pressure feed and recirculation pumps; hydraulic turbochargers and boosters; and spare parts, as well as repair, field, and commissioning services. The company also offers a solution to reduce energy consumption in natural gas processing and in refrigeration systems that use carbon dioxide. It provides its products under the ERI, Ultra PX, PX, Pressure Exchanger, PX Pressure Exchanger, PX PowerTrain, VorTeq, IsoBoost, AT, and AquaBold names to large engineering, procurement, and construction firms; end-users and industry consultants; original equipment manufacturers; and aftermarket customers. The company was incorporated in 1992 and is headquartered in San Leandro, California.
How the Company Makes MoneyEnergy Recovery generates revenue through the sale and licensing of its proprietary technologies and products, primarily the pressure exchanger devices. These devices are used in various sectors, with a significant portion of revenue stemming from the water desalination industry, where the technology helps in reducing the energy costs associated with reverse osmosis processes. The company also earns from the oil & gas sector by providing solutions that optimize hydraulic fracturing operations. Additionally, Energy Recovery engages in research and development partnerships and service agreements, which contribute to its revenue streams by enhancing product adoption and customer retention. The company’s focus on energy efficiency and sustainability aligns with global trends towards reduced energy consumption, further bolstering its market position.
Energy Recovery Financial Statement Overview
Summary
Energy Recovery demonstrates strong revenue growth and operational efficiency, with a solid balance sheet characterized by low leverage and high equity, providing a robust foundation for future growth. However, profitability has been impacted, as evidenced by the net income drop, and there are concerns with decreased operating cash flow despite maintaining stable overall cash flows.Income Statement
Energy Recovery has demonstrated strong revenue growth of 12.44% over the past year. The gross profit margin is robust at 67.16%, indicating effective cost management. However, the net profit margin has dropped to 0%, which is concerning despite strong EBIT and EBITDA margins of 46.74% and 46.74%, respectively. The company has shown substantial growth in EBIT, indicating operational efficiency.75
Positive
Balance Sheet
The company's balance sheet is solid, with a low debt-to-equity ratio of 0.05, reflecting conservative leverage. ROE is not calculable due to zero net income, but the equity ratio is high at 86.51%, demonstrating a strong equity position. The company maintains a healthy cash reserve, though a decrease compared to the previous year.82
Very Positive
Cash Flow
Operating cash flow decreased by 21.20%, but free cash flow remains positive, indicating continued ability to fund operations. The free cash flow to net income ratio is not applicable due to zero net income. While free cash flow has slightly decreased, the company still maintains efficient cash utilization.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 144.95M | 128.35M | 125.59M | 103.90M | 118.99M | Gross Profit |
| 96.93M | 87.08M | 87.36M | 71.23M | 90.74M | EBIT |
| 22.20M | 19.05M | 18.53M | 13.83M | 31.29M | EBITDA |
| 31.55M | 24.80M | 31.13M | 19.77M | 38.92M | Net Income Common Stockholders |
| 23.05M | 21.50M | 24.05M | 14.27M | 26.39M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 78.02M | 108.54M | 92.89M | 105.69M | 114.70M | Total Assets |
| 242.79M | 252.97M | 217.04M | 213.69M | 204.31M | Total Debt |
| 11.32M | 13.28M | 16.48M | 16.44M | 17.69M | Net Debt |
| -18.31M | -54.82M | -76.41M | -57.91M | -76.57M | Total Liabilities |
| 32.78M | 33.17M | 31.70M | 34.91M | 32.69M | Stockholders Equity |
| 210.01M | 219.81M | 185.34M | 178.78M | 171.62M |
| Cash Flow | Free Cash Flow | |||
| 19.22M | 23.49M | 9.50M | 6.85M | 10.09M | Operating Cash Flow |
| 20.52M | 26.05M | 12.63M | 13.53M | 16.87M | Investing Cash Flow |
| -15.65M | -19.11M | -6.95M | -20.56M | 46.60M | Financing Cash Flow |
| -43.28M | 4.79M | -23.67M | -12.79M | 4.37M |
Energy Recovery Technical Analysis
Negative
13.16
Price Trends
15.08
Negative
14.95
Negative
16.00
Negative
Market Momentum
-0.76
Positive
42.15
Neutral
35.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ERII, the sentiment is Negative. The current price of 13.16 is below the 20-day moving average (MA) of 14.16, below the 50-day MA of 15.08, and below the 200-day MA of 16.00, indicating a bearish trend. The MACD of -0.76 indicates Positive momentum. The RSI at 42.15 is Neutral, neither overbought nor oversold. The STOCH value of 35.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ERII.
Energy Recovery Risk Analysis
Energy Recovery disclosed 47 risk factors in its most recent earnings report. Energy Recovery reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Energy Recovery Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $946.59M | 20.73 | 18.34% | ― | 8.89% | 278.44% | |
64 Neutral | $4.43B | 12.01 | 5.16% | 249.23% | 4.03% | -11.73% | |
64 Neutral | $717.21M | 36.11 | 10.35% | ― | 10.93% | 6.99% | |
55 Neutral | $197.34M | ― | -0.76% | ― | 14.33% | 85.35% | |
55 Neutral | $34.78M | ― | -6.95% | ― | 7.30% | -247.48% | |
39 Underperform | $44.32M | ― | -110.71% | ― | ― | ― | |
38 Underperform | $1.67B | ― | -67.71% | ― | ― | -180.10% |
* Industrials Sector Average
Performance Comparison
ERII
Energy Recovery
13.16
-0.42
-3.09%
ARQ
Arq Inc
4.68
-2.25
-32.47%
CECO
Ceco Environmental
26.84
2.33
9.51%
FTEK
Fuel Tech
1.13
-0.07
-5.83%
SCWO
374Water
0.31
-0.98
-75.97%
PCT
PureCycle Technologies
9.29
3.76
67.99%
Energy Recovery Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: -12.50%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong performance in the desalination business and progress in the CO2 sector, along with effective strategies to mitigate tariff impacts. However, challenges such as unrecognized revenue from a megaproject order and significant lost revenue from China present concerns. Overall, the positive elements slightly outweigh the negative, showcasing a company navigating challenges while maintaining growth trajectories.Q1-2025 Updates
Positive Updates
Strong Desalination Business
The desalination business remains strong and on track for the year, with a high probability pipeline giving visibility into more than 80% of expected 2025 revenue.
Progress in CO2 Business
The CO2 business is on track with clear progress towards full commercialization. Three OEMs are integrating the PX into their designs, and a collaboration with Hillphoenix is moving forward, with important milestones expected.
Tariff Impact Mitigation
Despite increased tariffs, initiatives are in place to offset the majority of the net tariff impact with manageable effects on financial results for 2025.
International Expansion Efforts
Plans to establish a 100% owned and operated facility internationally are underway, with potential benefits of being closer to key markets like the Middle East and North Africa.
Negative Updates
Unrecognized Revenue from Megaproject Order
A megaproject order worth $2 million was shipped but not recognized as revenue in Q1.
Lost Revenue from China
Challenges in China have resulted in a $9 million loss in revenue, with efforts underway to offset this in other geographies.
Company Guidance
During the first quarter of fiscal year 2025, Energy Recovery maintained its revenue and profitability expectations, emphasizing a heavily back-end-weighted year, particularly within its strong desalination business. Despite increased tariffs, the company is working to offset the majority of the net impact, ensuring a manageable effect on its 2025 financial results. The CO2 division is progressing towards commercialization, with three OEMs integrating the PX into their designs and pilot tests anticipated in the summer. A notable collaboration with Hillphoenix was highlighted, with key milestones including a commercial agreement and a test site for the PXG integrated into their systems. Additionally, Energy Recovery is seeking to expand its international footprint, preferably through wholly owned facilities, while also exploring partnerships to navigate tariffs. Despite pulling guidance for the wastewater sector due to lost China revenue, the company is exploring opportunities in other geographies such as India and the U.S., where regulatory changes present potential growth. Overall, the company reaffirmed its gross margin guidance, underscoring a continued focus on margin expansion and cost structure optimization.Energy Recovery Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Energy Recovery Appoints New Chief Technology Officer
Positive
Feb 26, 2025
On February 26, 2025, Energy Recovery, Inc. announced the appointment of Dr. Ram Ramanan as the new Chief Technology Officer, effective March 3, 2025, succeeding Dr. Farshad Ghasripoor, who will retire but remain as an executive advisor until October 2025. Dr. Ramanan brings over 30 years of engineering leadership experience and will focus on advancing the company’s strategic vision for growth. Additionally, David Kim-Hak was promoted to Vice President, Wastewater, a role aimed at accelerating growth in municipal and industrial wastewater treatment. These appointments underscore Energy Recovery’s commitment to technical, operational, and cultural excellence, positioning the company for sustained growth.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.