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Energy Recovery (ERII)
NASDAQ:ERII
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Energy Recovery
(NASDAQ:ERII)
Rating:64Neutral
Price Target:
$13.00
▲(4.59%Upside)
Energy Recovery (ERII) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$677.43M
Dividend YieldN/A
Average Volume (3M)552.20K
Price to Earnings (P/E)34.1
Beta (1Y)1.41
Revenue Growth10.93%
EPS Growth6.99%
CountryUS
Employees254
SectorIndustrials
Sector Strength85
IndustryIndustrial - Pollution & Treatment Controls
Share Statistics
EPS (TTM)-0.18
Shares Outstanding54,499,226
10 Day Avg. Volume367,789
30 Day Avg. Volume552,196
Financial Highlights & Ratios
PEG Ratio0.67
Price to Book (P/B)6.22
Price to Sales (P/S)0.00
P/FCF Ratio121.25
Enterprise Value/Market Cap1.59
Enterprise Value/Revenue1.94
Enterprise Value/Gross Profit11.41
Enterprise Value/Ebitda10.63
Forecast
1Y Price Target
$13.75Price Target Upside10.62% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Energy Recovery Business Overview & Revenue Model
Company DescriptionEnergy Recovery (ERII) is a leading provider of energy-efficient technology solutions, operating primarily in the water desalination and industrial sectors. The company is renowned for its innovative pressure exchanger devices that significantly reduce energy consumption and operational costs in desalination processes, making clean water production more sustainable and cost-effective. Additionally, Energy Recovery is expanding its portfolio to include solutions for gas processing and refrigeration systems.
How the Company Makes MoneyEnergy Recovery makes money primarily through the sale and licensing of its proprietary pressure exchanger devices and related technology, which are integral to reducing energy consumption in water desalination plants. The company generates revenue by selling these devices directly to desalination plant operators and through licensing agreements that allow other companies to utilize its technology. Energy Recovery also earns income from providing maintenance and support services for its products. Significant partnerships with major desalination plant builders and operators around the world contribute to its revenue streams, as these collaborations enhance market reach and adoption of its energy-saving solutions.
Energy Recovery Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: -17.35%|
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 Financial Statement Overview
Summary
Energy Recovery exhibits solid financial health with strong profitability, a stable balance sheet, and good cash flow management. Despite modest revenue growth, the company maintains high profit margins and low leverage, ensuring financial stability.Income Statement
Energy Recovery shows solid profitability with a consistent gross profit margin above 60% over the years. The TTM gross profit margin is 66.9%, indicating strong cost management. However, recent revenue growth has been modest, with a slight decline in the TTM period. The net profit margin remains healthy at 15.2% in the TTM, and EBIT and EBITDA margins are stable, reflecting operational efficiency.80
Positive
Balance Sheet
The company maintains a robust balance sheet with low leverage. The debt-to-equity ratio is minimal at 0.06 in the TTM, indicating a strong equity base. Return on equity is solid at 10.8%, showing good returns for shareholders. The equity ratio of 87.9% highlights financial stability and low reliance on external debt.85
Very Positive
Cash Flow
Energy Recovery demonstrates strong cash flow management, with consistent free cash flow generation. The TTM free cash flow is $24.04 million, supported by positive operating cash flow trends. The operating cash flow to net income ratio is 1.15, indicating efficient earnings conversion to cash. However, free cash flow growth is moderate, and the company faces investment challenges due to fluctuating financing cash flows.78
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 140.92M | 144.95M | 128.35M | 125.59M | 103.90M | 118.99M | Gross Profit |
| 94.26M | 96.93M | 87.08M | 87.36M | 71.23M | 90.74M | EBIT |
| 18.10M | 22.20M | 19.05M | 18.53M | 13.83M | 31.29M | EBITDA |
| 27.27M | 31.55M | 24.80M | 31.13M | 19.77M | 38.92M | Net Income Common Stockholders |
| 21.43M | 23.05M | 21.50M | 24.05M | 14.27M | 26.39M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 83.55M | 78.02M | 108.54M | 92.89M | 105.69M | 114.70M | Total Assets |
| 225.39M | 242.79M | 252.97M | 217.04M | 213.69M | 204.31M | Total Debt |
| 11.11M | 11.32M | 13.28M | 16.48M | 16.44M | 17.69M | Net Debt |
| -38.03M | -18.31M | -54.82M | -76.41M | -57.91M | -76.57M | Total Liabilities |
| 27.28M | 32.78M | 33.17M | 31.70M | 34.91M | 32.69M | Stockholders Equity |
| 198.11M | 210.01M | 219.81M | 185.34M | 178.78M | 171.62M |
| Cash Flow | Free Cash Flow | ||||
| 24.04M | 19.22M | 23.49M | 9.50M | 6.85M | 10.09M | Operating Cash Flow |
| 24.70M | 20.52M | 26.05M | 12.63M | 13.53M | 16.87M | Investing Cash Flow |
| 2.01M | -15.65M | -19.11M | -6.95M | -20.56M | 46.60M | Financing Cash Flow |
| -48.35M | -43.28M | 4.79M | -23.67M | -12.79M | 4.37M |
Energy Recovery Technical Analysis
Negative
12.43
Price Trends
13.65
Negative
14.52
Negative
15.56
Negative
Market Momentum
-0.30
Negative
40.87
Neutral
21.88
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 12.43 is below the 20-day moving average (MA) of 12.59, below the 50-day MA of 13.65, and below the 200-day MA of 15.56, indicating a bearish trend. The MACD of -0.30 indicates Negative momentum. The RSI at 40.87 is Neutral, neither overbought nor oversold. The STOCH value of 21.88 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 2 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 (66)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $1.03B | 22.63 | 18.34% | ― | 8.89% | 278.44% | |
66 Neutral | $4.50B | 12.26 | 5.40% | 3.65% | 4.17% | -12.02% | |
64 Neutral | $677.43M | 34.11 | 10.35% | ― | 10.93% | 6.99% | |
56 Neutral | $217.39M | ― | -0.76% | ― | 14.33% | 85.35% | |
54 Neutral | $63.71M | ― | -6.95% | ― | 7.30% | -247.48% | |
39 Underperform | $56.22M | ― | -110.71% | ― | ― | ― | |
38 Underperform | $2.13B | ― | -67.71% | ― | ― | -180.10% |
* Industrials Sector Average
Performance Comparison
ERII
Energy Recovery
12.21
-0.32
-2.55%
ARQ
Arq Inc
5.15
-0.73
-12.41%
CECO
Ceco Environmental
29.30
5.10
21.07%
FTEK
Fuel Tech
2.07
1.01
95.28%
SCWO
374Water
0.39
-0.78
-66.67%
PCT
PureCycle Technologies
11.87
5.74
93.64%
Energy Recovery Corporate Events
Executive/Board ChangesShareholder Meetings
Energy Recovery Holds Annual Stockholders Meeting
Neutral
Jun 11, 2025
On June 5, 2025, Energy Recovery, Inc. held its Annual Meeting of Stockholders, where six directors were elected to the Board for a one-year term. The meeting also saw the approval of executive compensation for 2024 and the ratification of Deloitte & Touche LLP as the independent accounting firm for 2025, with approximately 84.2% of shares represented.
The most recent analyst rating on (ERII) stock is a Hold with a $20.00 price target. To see the full list of analyst forecasts on Energy Recovery stock, see the ERII Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.