Energy Recovery (ERII) AI Stock Analysis

• Market Cap: $688.33M
• Dividend Yield: N/A
• Average Volume (3M): 561.58K
• Price to Earnings (P/E): 34.7
• Beta (1Y): 1.41
• Revenue Growth: 10.93%
• EPS Growth: 6.99%
• Country: US
• Employees: 254
• Sector: Industrials
• Sector Strength: 91
• Industry: Industrial - Pollution & Treatment Controls
• EPS (TTM): -0.18
• Shares Outstanding: 54,499,226
• 10 Day Avg. Volume: 390,395
• 30 Day Avg. Volume: 561,583
• PEG Ratio: 1.63
• Price to Book (P/B): 3.07
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 32.23
• Enterprise Value/Market Cap: 0.87
• Enterprise Value/Revenue: 1.11
• Enterprise Value/Gross Profit: 6.20
• Enterprise Value/Ebitda: 6.29
• 1Y Price Target: $13.75
• Price Target Upside: 8.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 64 Neutral
• Price Target: $13.00 ▲(2.20%Upside)

Energy Recovery shows strong financial fundamentals and strategic efforts in new business areas, but technical indicators and valuation concerns weigh down the score. Recent executive changes might drive future growth, yet risks from market conditions and valuation remain significant.

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 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 Money

Energy 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 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.

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.

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.

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

• Technical Analysis Sentiment: Negative
• Last Price: 12.72
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 12.72 is above the 20-day moving average (MA) of 12.56, below the 50-day MA of 13.97, and below the 200-day MA of 15.69, indicating a neutral trend. The MACD of -0.41 indicates Negative momentum. The RSI at 44.34 is Neutral, neither overbought nor oversold. The STOCH value of 67.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ERII.

Energy Recovery Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CECO	75 Outperform	$923.67M	20.23	18.34%	―	8.89%	278.44%
Sector *	66 Neutral	$4.51B	12.29	5.40%	248.53%	4.14%	-12.41%
ERII	64 Neutral	$688.33M	34.66	10.35%	―	10.93%	6.99%
FTEK	62 Neutral	$58.17M	―	-6.95%	―	7.30%	-247.48%
ARQ	56 Neutral	$223.72M	―	-0.76%	―	14.33%	85.35%
SCWO	39 Underperform	$57.89M	―	-110.71%	―	―	―
PCT	38 Underperform	$1.77B	―	-67.71%	―	―	-180.10%

Energy Recovery Corporate Events

Energy Recovery Appoints New Chief Technology Officer

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.