Energy Recovery (ERII) AI Stock Analysis

• Market Cap: $772.44M
• Dividend Yield: N/A
• Average Volume (3M): 421.06K
• Price to Earnings (P/E): 35.1
• Beta (1Y): 1.47
• Revenue Growth: 6.19%
• EPS Growth: 15.04%
• Country: US
• Employees: 254
• Sector: Industrials
• Sector Strength: 76
• Industry: Industrial - Pollution & Treatment Controls
• EPS (TTM): 0.04
• Shares Outstanding: 53,198,387
• 10 Day Avg. Volume: 400,610
• 30 Day Avg. Volume: 421,061
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.81
• Enterprise Value/Revenue: 4.43
• Enterprise Value/Gross Profit: 6.63
• Enterprise Value/Ebitda: 20.89
• 1Y Price Target: $16.67
• Price Target Upside: 14.41% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 76 Outperform
• Price Target: $16.00 ▲(9.81% Upside)

Energy Recovery's strong financial performance and positive earnings call are the most significant factors driving the score. Technical indicators show positive momentum, while valuation suggests the stock is relatively expensive. The company's strategic share repurchases and growth initiatives further support the score.

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 generates revenue through the sale of its proprietary technologies and products, primarily the PX Pressure Exchanger and related systems. The company earns money by selling these products to clients in the desalination, oil and gas, and chemical industries, where they are used to improve energy efficiency and reduce operational costs. Key revenue streams include direct product sales, long-term service agreements, and maintenance contracts. Additionally, ERII benefits from strategic partnerships with major industry players and engineering firms that facilitate project collaborations and enhance market penetration, contributing to stable and recurring revenue. The company's focus on innovation and expanding its product portfolio also plays a critical role in driving growth and profitability.

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.

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.

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	141.78M	144.95M	128.35M	125.59M	103.90M	118.99M
Gross Profit	94.64M	96.93M	87.08M	87.36M	71.23M	90.74M
EBITDA	30.03M	28.02M	24.80M	31.13M	19.77M	38.92M
Net Income	24.13M	23.05M	21.50M	24.05M	14.27M	26.39M
Balance Sheet
Total Assets	212.28M	242.79M	252.97M	217.04M	213.69M	204.31M
Cash, Cash Equivalents and Short-Term Investments	79.52M	78.02M	108.54M	92.89M	105.69M	114.70M
Total Debt	10.56M	11.32M	13.28M	16.48M	16.44M	17.69M
Total Liabilities	27.07M	32.78M	33.17M	31.70M	34.91M	32.69M
Stockholders Equity	185.21M	210.01M	219.81M	185.34M	178.78M	171.62M
Cash Flow
Free Cash Flow	20.18M	19.22M	23.49M	9.50M	6.85M	10.09M
Operating Cash Flow	20.78M	20.52M	26.05M	12.63M	13.53M	16.87M
Investing Cash Flow	61.74M	-15.65M	-19.11M	-6.95M	-20.56M	46.60M
Financing Cash Flow	-65.81M	-43.28M	4.79M	-23.67M	-12.79M	4.37M

Energy Recovery Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 14.57
• 50DMA: Positive
• 100DMA: Positive
• 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 Positive. The current price of 14.57 is above the 20-day moving average (MA) of 14.13, above the 50-day MA of 13.49, and below the 200-day MA of 14.61, indicating a neutral trend. The MACD of 0.29 indicates Negative momentum. The RSI at 58.57 is Neutral, neither overbought nor oversold. The STOCH value of 64.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ERII.

Energy Recovery Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ERII	76 Outperform	$772.44M	35.13	11.95%	―	6.19%	15.04%
CECO	76 Outperform	$1.70B	33.59	19.67%	―	15.74%	294.80%
Sector *	64 Neutral	$10.95B	16.37	8.81%	1.96%	2.68%	-15.33%
ARQ	57 Neutral	$313.78M	―	-0.81%	―	11.96%	70.59%
FTEK	53 Neutral	$97.57M	―	-7.69%	―	-4.78%	-1359.72%
SCWO	39 Underperform	$40.81M	―	-160.82%	―	―	―
PCT	38 Underperform	$2.45B	―	-148.91%	―	―	-79.12%

Energy Recovery Corporate Events

Energy Recovery Announces New $25M Share Buyback Plan

On August 6, 2025, Energy Recovery, Inc. announced a new share repurchase program authorized by its Board of Directors to buy back up to $25 million of its common stock over the next 12 months. This initiative follows two previous repurchase programs totaling $105 million between November 2024 and August 2025, reflecting the company’s strong cash generation and confidence in its growth strategy. The repurchase program is flexible, allowing purchases through various trading methods and can be adjusted or discontinued as needed. The company plans to fund these repurchases with cash on hand, indicating robust financial health and a commitment to returning capital to shareholders.

Energy Recovery Holds Annual Stockholders Meeting

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.