Energy Recovery (ERII)
NASDAQ:ERII
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Energy Recovery
(NASDAQ:ERII)
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Rating:61Neutral
Price Target:
$12.00
▲(12.99% Upside)
Action:ReiteratedDate:04/01/26
The score is supported by ERII’s strong balance sheet and structurally high profitability, plus cost actions and product initiatives outlined on the earnings call. It is held back by weak technical trends (below key moving averages with negative MACD), a relatively high P/E, and management’s near-term revenue timing risks from delayed desalination projects.
Positive Factors
Strong balance sheet
Very low leverage and a sizable equity base give the company durable financial flexibility to fund R&D, buybacks, and capex through lumpy project cycles. This reduces refinancing risk, supports long-term investment in product development and international manufacturing, and cushions revenue volatility.
Negative Factors
Project timing volatility ('air pocket')
Dependence on a handful of large SWRO projects creates persistent revenue timing risk. Multi-million-dollar project slips produce back‑end weighted revenue and uneven cash flow, complicating planning, utilization, and the cadence of aftermarket sales for several quarters to years unless project cadence reliably normalizes.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong balance sheet
Very low leverage and a sizable equity base give the company durable financial flexibility to fund R&D, buybacks, and capex through lumpy project cycles. This reduces refinancing risk, supports long-term investment in product development and international manufacturing, and cushions revenue volatility.
Read all positive factors
Energy Recovery (ERII) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$561.04M
Dividend YieldN/A
Average Volume (3M)858.74K
Price to Earnings (P/E)31.6
Beta (1Y)1.38
Revenue Growth0.10%
EPS Growth1.50%
CountryUS
Employees254
SectorIndustrials
Sector Strength72
IndustryIndustrial - Pollution & Treatment Controls
Share Statistics
EPS (TTM)0.50
Shares Outstanding52,828,667
10 Day Avg. Volume643,775
30 Day Avg. Volume858,741
Financial Highlights & Ratios
PEG Ratio4.21
Price to Book (P/B)3.52
Price to Sales (P/S)5.39
P/FCF Ratio41.62
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue3.89
Enterprise Value/Gross Profit5.97
Enterprise Value/Ebitda13.75
Forecast
1Y Price Target
$14.00Price Target Upside31.83% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)0.42
Revenue Forecast (FY)$121.26M
Energy Recovery Business Overview & Revenue Model
Company Description
Energy 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 an...
How the Company Makes Money
Energy Recovery makes money primarily by selling energy recovery devices and related equipment used in SWRO desalination systems. Its main revenue stream is product sales of its pressure exchanger–based solutions to desalination original equipment...
Energy Recovery Key Performance Indicators (KPIs)
Any
Revenue by Segment
Highlights revenue from different business units, indicating which segments are driving growth and where the company might focus future efforts.
Highlights revenue from different business units, indicating which segments are driving growth and where the company might focus future efforts.
Data provided by:
The Fly
The FlyEnergy Recovery Earnings Call Summary
Earnings Call Date:Feb 25, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Neutral
The call balanced positive strategic developments—product innovation (PX Q650), cost reductions (OpEx down ~$13M, CO2 annualized savings ~$7M), planned manufacturing expansion, and a profitable wastewater opportunity—against material near-term execution challenges: an "air pocket" caused by delayed large desalination projects with an identified $25–30M assumed slip plus another $15–25M at risk (totaling ~$40–55M potential slippage), the disappointing wind-down of the CO2 initiative (and related ~20 headcount reduction), and tariff/market timing risks for wastewater growth. Management emphasized discipline, confidence in the 2027 outlook driven by pipeline, and actions to control costs and deploy capital, but near-term revenue timing remains the key risk factor.Positive Updates
Strategic Focus on Water Business
Company is now fully focused on its water business, citing a large, growing and profitable end market where it claims best pressure exchanger technology and a strong market position; management confident in growth for 2027 based on pipeline and demand trends.
Negative Updates
Project Delays Creating Revenue 'Air Pocket' for 2025–2026
Management said the company hit an 'air pocket' due to delays at several large desalination projects, characterizing the business as lumpy and timing-driven; underlying demand remains intact but multiple large projects slipped.
Read all updates
Q4-2025 Updates
Positive
Negative
Strategic Focus on Water Business
Company is now fully focused on its water business, citing a large, growing and profitable end market where it claims best pressure exchanger technology and a strong market position; management confident in growth for 2027 based on pipeline and demand trends.
Read all positive updates
Company Guidance
Management said 2025/2026 are in an “air pocket” driven by timing on large desal projects (two projects shifted into 2026 and the formal guidance assumes three additional projects—about $25–30 million—will slip into 2027, plus a further $15–25 million of at‑risk pipeline as a buffer), which an analyst summarized as implying a 2026 midpoint near $45 million and a revenue cadence that is back‑end weighted (similar to 2025). They reiterated confidence in 2027 growth based on the pipeline, and highlighted cost and capital actions: OpEx has been reduced from about $77 million to $64 million (CO2 excluded) with further savings possible, the CO2 wind‑down will annualize to roughly $7 million (not fully realized in 2026) and eliminated ~20 headcount, CapEx guidance is $3–6 million this year (versus roughly $1.5 million annual spend the prior two years) with additional manufacturing capital to be incurred to open a non‑U.S. facility (site selection by end‑H1, phased production starting Q1 2027), PX Q650 production for sale starting 2H 2026 (expected to raise effective ASPs and expand gross margins), and the wastewater business (historically $10–12 million with mid‑ to high‑60% margins) expected to scale into 2027.Energy Recovery Financial Statement Overview
Summary
Income Statement
62
Positive
Balance Sheet
86
Very Positive
Cash Flow
71
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 134.70M | 144.95M | 128.35M | 125.59M | 103.90M |
| Gross Profit | 87.78M | 96.93M | 87.08M | 87.36M | 71.23M |
| EBITDA | 31.36M | 28.02M | 24.80M | 31.13M | 19.77M |
| Net Income | 22.96M | 23.05M | 21.50M | 24.05M | 14.27M |
Balance Sheet | |||||
| Total Assets | 231.51M | 242.79M | 252.97M | 217.04M | 213.69M |
| Cash, Cash Equivalents and Short-Term Investments | 75.25M | 78.02M | 108.54M | 89.83M | 105.69M |
| Total Debt | 9.43M | 11.32M | 13.28M | 14.88M | 16.44M |
| Total Liabilities | 25.32M | 32.78M | 33.17M | 31.70M | 34.91M |
| Stockholders Equity | 206.19M | 210.01M | 219.81M | 185.34M | 178.78M |
Cash Flow | |||||
| Free Cash Flow | 17.44M | 19.22M | 23.49M | 9.50M | 6.85M |
| Operating Cash Flow | 18.77M | 20.52M | 26.05M | 12.63M | 13.53M |
| Investing Cash Flow | 33.98M | -15.65M | -19.11M | -6.95M | -20.56M |
| Financing Cash Flow | -34.53M | -43.28M | 4.79M | -23.67M | -12.79M |
Energy Recovery Technical Analysis
Negative
10.62
Price Trends
12.08
Negative
13.17
Negative
13.95
Negative
Market Momentum
-0.14
Negative
45.84
Neutral
75.46
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 10.62 is above the 20-day moving average (MA) of 10.33, below the 50-day MA of 12.08, and below the 200-day MA of 13.95, indicating a neutral trend. The MACD of -0.14 indicates Negative momentum. The RSI at 45.84 is Neutral, neither overbought nor oversold. The STOCH value of 75.46 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $2.13B | 42.25 | 16.53% | ― | 29.86% | 331.33% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $561.04M | 31.61 | 11.92% | ― | 0.10% | 1.50% | |
56 Neutral | $42.38M | -20.77 | -5.70% | ― | -5.66% | -397.46% | |
52 Neutral | $31.59M | -24.81 | -53.54% | ― | -49.70% | -2.72% | |
50 Neutral | $101.12M | -2.58 | -25.66% | ― | 7.20% | -2951.61% | |
46 Neutral | $18.40M | -1.35 | -73.79% | ― | 10.97% | 44.99% |
* Industrials Sector Average
ERII
Energy Recovery
10.62
-4.25
-28.58%
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Energy Recovery Corporate Events
Business Operations and StrategyFinancial Disclosures
Energy Recovery Exits CO2 Grocery Business, Refocuses Strategy
Negative
Feb 25, 2026
On February 25, 2026, Energy Recovery moved to exit its CO2 retail grocery business within the Emerging Technologies segment, concluding that the initiative would require excessive time, capital and risk to achieve scale, and no longer fit its ret...
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.