Energy Recovery (ERII) AI Stock Analysis

• Market Cap: $722.54M
• Dividend Yield: N/A
• Average Volume (3M): 578.11K
• Price to Earnings (P/E): 40.1
• Beta (1Y): 1.30
• Revenue Growth: 0.10%
• EPS Growth: 1.50%
• Country: US
• Employees: 254
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Pollution & Treatment Controls
• EPS (TTM): 0.07
• Shares Outstanding: 52,972,095
• 10 Day Avg. Volume: 679,173
• 30 Day Avg. Volume: 578,107
• PEG Ratio: 6.93
• Price to Book (P/B): 4.00
• Price to Sales (P/S): 5.80
• P/FCF Ratio: 43.75
• Enterprise Value/Market Cap: 1.06
• Enterprise Value/Revenue: 5.65
• Enterprise Value/Gross Profit: 8.48
• Enterprise Value/Ebitda: 27.48
• 1Y Price Target: $19.33
• Price Target Upside: 41.72% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 0.56
• Revenue Forecast (FY): $150.77M

• Rating: 68 Neutral
• Price Target: $16.00 ▲(17.30% Upside)

Energy Recovery's overall stock score reflects solid financial performance and a positive outlook from the latest earnings call, despite technical indicators suggesting short-term bearish momentum. The high P/E ratio indicates growth expectations, but the lack of a dividend yield may deter income-focused investors. The company's strategic focus on cost control and growth in wastewater and CO2 initiatives supports long-term confidence.

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 demonstrates solid financial health with strong margins and a robust balance sheet. While revenue growth has slowed, the company maintains efficient operations and a conservative leverage profile. Cash flow generation remains stable, though there are signs of pressure on free cash flow growth. Overall, the company is well-positioned but should focus on revitalizing revenue growth and enhancing profitability.

Income Statement

Energy Recovery's income statement shows a strong gross profit margin of 66.7% for TTM, indicating efficient cost management. However, the net profit margin has decreased to 11.6% from 15.9% in the previous year, reflecting reduced profitability. The revenue growth rate is negative at -4.7% TTM, suggesting a decline in sales compared to the previous period. Despite these challenges, the company maintains a healthy EBIT margin of 13.7% and a robust EBITDA margin of 26.0%.

Balance Sheet

The balance sheet is solid with a low debt-to-equity ratio of 0.055, indicating conservative leverage. Return on equity is at 8.1% TTM, which is a decline from previous years but still reflects decent profitability. The equity ratio stands at 86.3%, showcasing a strong equity base relative to total assets, which enhances financial stability.

Cash Flow

Cash flow analysis reveals a slight decline in free cash flow growth at -1.5% TTM, indicating potential challenges in generating cash. However, the operating cash flow to net income ratio is strong at 0.97, suggesting efficient cash generation relative to earnings. The free cash flow to net income ratio is also healthy at 0.96, reflecting good cash conversion.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	135.19M	144.95M	128.35M	125.59M	103.90M	92.09M
Gross Profit	90.09M	96.93M	87.08M	87.36M	71.23M	63.84M
EBITDA	27.80M	28.02M	24.80M	31.13M	19.77M	38.92M
Net Income	19.52M	23.05M	21.50M	24.05M	14.27M	26.39M
Balance Sheet
Total Assets	209.65M	242.79M	252.97M	217.04M	213.69M	204.31M
Cash, Cash Equivalents and Short-Term Investments	70.38M	78.02M	108.54M	89.83M	105.69M	114.70M
Total Debt	10.00M	11.32M	13.28M	14.88M	16.44M	17.69M
Total Liabilities	28.81M	32.78M	33.17M	31.70M	34.91M	32.69M
Stockholders Equity	180.83M	210.01M	219.81M	185.34M	178.78M	171.62M
Cash Flow
Free Cash Flow	19.88M	19.22M	23.49M	9.50M	6.85M	10.09M
Operating Cash Flow	20.65M	20.52M	26.05M	12.63M	13.53M	16.87M
Investing Cash Flow	43.53M	-15.65M	-19.11M	-6.95M	-20.56M	46.60M
Financing Cash Flow	-80.50M	-43.28M	4.79M	-23.67M	-12.79M	4.37M

Energy Recovery Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 13.64
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• 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 13.64 is below the 20-day moving average (MA) of 15.33, below the 50-day MA of 15.61, and below the 200-day MA of 14.53, indicating a bearish trend. The MACD of -0.65 indicates Positive momentum. The RSI at 33.91 is Neutral, neither overbought nor oversold. The STOCH value of 22.03 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	72 Outperform	$1.79B	35.44	18.85%	―	29.86%	331.33%
ERII	68 Neutral	$722.54M	40.08	9.41%	―	0.10%	1.50%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
CLIR	52 Neutral	$45.34M	-7.69	-53.13%	―	-49.70%	-2.72%
ARQ	45 Neutral	$271.09M	―	-1.80%	―	7.20%	-2951.61%
FTEK	44 Neutral	$78.31M	-23.98	-7.10%	―	-5.66%	-397.46%
LIQT	41 Neutral	$22.02M	-1.71	-73.79%	―	10.97%	44.99%

Energy Recovery Corporate Events

Energy Recovery’s Earnings Call Highlights Growth Amid Challenges

Energy Recovery’s recent earnings call conveyed a generally positive sentiment, highlighting strong sales execution and effective cost control measures. While there are some concerns regarding delays in CO2 commercialization and uncertainties in the data center market, the company’s achievements in wastewater revenue and the lithium extraction project underscore promising growth prospects.

Energy Recovery’s Q3 2025 Financial Performance Overview

Energy Recovery, Inc. is a company specializing in energy-saving technology, primarily serving the desalination industry and other sectors to enhance operational efficiency and reduce emissions. Headquartered in the San Francisco Bay Area, the company operates globally with manufacturing and R&D facilities in California.

Energy Recovery’s Earnings Call Highlights Growth and Challenges

Energy Recovery’s recent earnings call conveyed a generally positive sentiment, with strong performance in core areas such as desalination and wastewater. The company is on track with its strategic initiatives, including share repurchases and expansion in wastewater. However, uncertainties in emerging markets like data centers and ongoing challenges with tariffs in China were noted.

Energy Recovery Reports Strong Q2 2025 Performance

Energy Recovery, a company specializing in energy recovery devices and solutions for water and CO2 industries, has reported its Q2 2025 earnings, showcasing strong financial performance and strategic advancements. The company operates primarily in the water desalination and wastewater sectors, with a growing focus on CO2 applications.