Energy Recovery (ERII) AI Stock Analysis

• Market Cap: $733.01M
• Dividend Yield: N/A
• Average Volume (3M): 391.71K
• Price to Earnings (P/E): 37.5
• Beta (1Y): 1.42
• Revenue Growth: 10.93%
• EPS Growth: 6.99%
• Country: US
• Employees: 254
• Sector: Industrials
• Sector Strength: 90
• Industry: Industrial - Pollution & Treatment Controls
• EPS (TTM): -0.18
• Shares Outstanding: 54,499,226
• 10 Day Avg. Volume: 335,416
• 30 Day Avg. Volume: 391,709
• PEG Ratio: -3.43
• Price to Book (P/B): 3.62
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 29.61
• Enterprise Value/Market Cap: 0.91
• Enterprise Value/Revenue: 1.21
• Enterprise Value/Gross Profit: 7.11
• Enterprise Value/Ebitda: 6.62
• 1Y Price Target: $13.75
• Price Target Upside: 0.73% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 75 Outperform
• Price Target: $15.00 ▲(9.89%Upside)

Energy Recovery scores strongly due to its robust financial performance and effective management strategies as highlighted in the earnings call. Technical indicators suggest a cautiously optimistic outlook. However, the stock's higher valuation and lack of dividend yield, along with some revenue recognition challenges, slightly temper the overall score.

Energy Recovery Business Overview & Revenue Model

Company Description

Energy Recovery (ERII) is a leading provider of energy-efficient technology solutions, operating primarily in the water desalination and industrial sectors. The company is renowned for its innovative pressure exchanger devices that significantly reduce energy consumption and operational costs in desalination processes, making clean water production more sustainable and cost-effective. Additionally, Energy Recovery is expanding its portfolio to include solutions for gas processing and refrigeration systems.

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 exhibits solid financial health with strong profitability, a stable balance sheet, and good cash flow management. Profit margins are high, and leverage is low, ensuring financial stability, though modest revenue growth needs attention.

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	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
EBITDA	31.55M	24.80M	31.13M	19.77M	38.92M
Net Income	23.05M	21.50M	24.05M	14.27M	26.39M
Balance Sheet
Total Assets	242.79M	252.97M	217.04M	213.69M	204.31M
Cash, Cash Equivalents and Short-Term Investments	78.02M	108.54M	92.89M	105.69M	114.70M
Total Debt	11.32M	13.28M	16.48M	16.44M	17.69M
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: Neutral
• Last Price: 13.65
• 50DMA: Positive
• 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 Neutral. The current price of 13.65 is above the 20-day moving average (MA) of 12.82, above the 50-day MA of 12.72, and below the 200-day MA of 15.20, indicating a neutral trend. The MACD of 0.18 indicates Negative momentum. The RSI at 63.47 is Neutral, neither overbought nor oversold. The STOCH value of 67.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ERII.

Energy Recovery Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CECO	80 Outperform	$1.12B	24.69	18.34%	―	8.89%	278.44%
ERII	75 Outperform	$733.01M	37.46	10.35%	―	10.93%	6.99%
Sector *	71 Outperform	¥254.15B	13.65	8.48%	3.02%	6.34%	13.16%
ARQ	56 Neutral	$251.16M	―	-0.76%	―	14.33%	85.35%
FTEK	55 Neutral	$81.87M	―	-6.95%	―	7.30%	-247.48%
SCWO	39 Underperform	$28.94M	―	-110.71%	―	―	―
PCT	38 Underperform	$2.71B	―	-67.71%	―	―	-180.10%

Energy Recovery Corporate Events

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.

The most recent analyst rating on (ERII) stock is a Hold with a $20.00 price target. To see the full list of analyst forecasts on Energy Recovery stock, see the ERII Stock Forecast page.