Energy Recovery (ERII)
NASDAQ:ERII
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Energy Recovery
(NASDAQ:ERII)
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Rating:62Neutral
Price Target:
$10.50
▲(3.55% Upside)
Action:DowngradedDate:03/27/26
The score is primarily supported by ERII’s strong financial footing (low leverage, solid liquidity, and high gross margins). It is held back by weak technicals (downtrend across key moving averages and negative MACD) and a relatively high P/E given recent volatility in revenue and cash flow; the corporate refocus is modestly constructive but includes near-term charges.
Positive Factors
Balance sheet strength
Very low leverage and sizable equity provide enduring financial flexibility. This balance-sheet strength lets management fund R&D, support customers through long desalination project cycles, and absorb demand volatility without forcing distressed asset sales or urgent external financing.
Negative Factors
Revenue volatility
Sharp year-to-year swings in revenue reduce predictability of earnings and capacity utilization. For a company tied to large, lumpy desalination projects, this volatility complicates hiring, supply contracts, and capital allocation, increasing execution risk over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Balance sheet strength
Very low leverage and sizable equity provide enduring financial flexibility. This balance-sheet strength lets management fund R&D, support customers through long desalination project cycles, and absorb demand volatility without forcing distressed asset sales or urgent external financing.
Read all positive factors
Energy Recovery (ERII) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$525.12M
Dividend YieldN/A
Average Volume (3M)897.89K
Price to Earnings (P/E)31.6
Beta (1Y)1.41
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. Volume1,000,302
30 Day Avg. Volume897,887
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/Revenue3.62
Enterprise Value/Gross Profit5.56
Enterprise Value/Ebitda12.81
Forecast
1Y Price Target
$14.00Price Target Upside38.07% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)0.46
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:Nov 05, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook with strong sales execution and effective cost control measures. However, there are delays in the CO2 commercialization timeline and uncertainty in data center market opportunities. Despite these challenges, the company's achievements in wastewater revenue and the lithium extraction project highlight positive growth prospects.Positive Updates
Strong Sales Execution
Mega-project shipments improved during the quarter, and wastewater revenue continued to rebound, leading to the reiteration of full-year revenue guidance.
Negative Updates
CO2 Commercialization Delays
The commercialization of the CO2 business is expected to be delayed until 2027, as large OEMs require another summer season of testing with their larger customers.
Read all updates
Q3-2025 Updates
Positive
Negative
Strong Sales Execution
Mega-project shipments improved during the quarter, and wastewater revenue continued to rebound, leading to the reiteration of full-year revenue guidance.
Read all positive updates
Company Guidance
During Energy Recovery's Third Quarter 2025 Earnings Call, the company provided guidance indicating a strong quarter of sales execution with improvements in mega-project shipments and a rebound in wastewater revenue, leading to the reiteration of their full-year revenue guidance. The company also announced a reduction in full-year operating expenses (OpEx) guidance due to effective cost control measures, while still investing in their growing wastewater business. Despite strong OEM engagement in the CO2 business, commercialization is still in its early stages, with significant traction expected in 2026. The company plans to continue testing and aims for a commercial agreement with a large OEM by 2027. Additionally, the lithium extraction project in Argentina, valued at $350,000, marks a promising development in their wastewater treatment applications. Overall, Energy Recovery emphasized their commitment to maintaining operational efficiency while pursuing growth opportunities.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
10.14
Price Trends
13.18
Negative
13.83
Negative
14.09
Negative
Market Momentum
-1.00
Negative
34.55
Neutral
60.58
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 10.14 is below the 20-day moving average (MA) of 10.32, below the 50-day MA of 13.18, and below the 200-day MA of 14.09, indicating a bearish trend. The MACD of -1.00 indicates Negative momentum. The RSI at 34.55 is Neutral, neither overbought nor oversold. The STOCH value of 60.58 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 | $2.01B | 42.25 | 16.53% | ― | 29.86% | 331.33% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | $525.12M | 31.61 | 11.92% | ― | 0.10% | 1.50% | |
56 Neutral | $38.39M | -20.77 | -5.70% | ― | -5.66% | -397.46% | |
48 Neutral | $107.12M | -2.58 | -25.66% | ― | 7.20% | -2951.61% | |
48 Neutral | $20.13M | -7.52 | -56.07% | ― | -49.70% | -2.72% | |
46 Neutral | $17.71M | -1.35 | -73.79% | ― | 10.97% | 44.99% |
* Industrials Sector Average
ERII
Energy Recovery
9.94
-6.24
-38.57%
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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.