Energy Recovery (ERII)
NASDAQ:ERII
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Energy Recovery
(NASDAQ:ERII)
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Rating:61Neutral
Price Target:
$9.50
▼(-10.21% Downside)
Action:Reiterated
Date:05/09/26
ERII scores as moderate overall: strong financial quality (high margins, very low leverage, and generally solid cash generation) is the main support. The score is held back by weak technicals (downtrend and negative momentum) and elevated near-term uncertainty from the earnings call, particularly the withdrawal of 2026 guidance tied to geopolitical risk and leadership transitions; valuation is also less supportive due to a negative P/E and no provided dividend yield.
Positive Factors
High Gross & Operating Margins
Energy Recovery's proprietary pressure-exchanger technology supports structurally high gross and operating margins. Sustained ~64% gross and double-digit EBIT margins provide durable cash generation and reinvestment capacity, helping absorb project timing volatility and fund R&D, manufacturing upgrades and aftermarket support over multiple years.
Negative Factors
Geopolitical Exposure & Guidance Withdrawal
Material exposure to Middle East projects has prompted a pause in 2026 guidance, creating sustained uncertainty around project timing, award-to-build conversion and revenue recognition. Delays or cancellations in a key region can postpone demand realization and extend working capital and inventory cycles for months to years.
Read all positive and negative factors
Positive Factors
Negative Factors
High Gross & Operating Margins
Energy Recovery's proprietary pressure-exchanger technology supports structurally high gross and operating margins. Sustained ~64% gross and double-digit EBIT margins provide durable cash generation and reinvestment capacity, helping absorb project timing volatility and fund R&D, manufacturing upgrades and aftermarket support over multiple years.
Read all positive factors
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 (ERII) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$444.32M
Dividend YieldN/A
Average Volume (3M)845.52K
Price to Earnings (P/E)―
Beta (1Y)1.20
Revenue Growth-3.05%
EPS Growth4.46%
CountryUS
Employees254
SectorIndustrials
Sector Strength72
IndustryIndustrial - Pollution & Treatment Controls
Share Statistics
EPS (TTM)0.39
Shares Outstanding51,545,258
10 Day Avg. Volume778,272
30 Day Avg. Volume845,518
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 Cap0.97
Enterprise Value/Revenue3.15
Enterprise Value/Gross Profit4.90
Enterprise Value/Ebitda11.08
Forecast
1Y Price Target
$12.00Price Target Upside13.42% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)0.19
Revenue Forecast (FY)$102.79M
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 Earnings Call Summary
Earnings Call Date:May 06, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 05, 2026
Earnings Call Sentiment Neutral
The call presents a mix of meaningful commercial and strategic positives — notably the Q650 launch with early orders, manufacturing expansion plans, and pipeline opportunities in China, South America and potentially Texas — alongside substantial near-term uncertainties tied to the Middle East conflict, withdrawal of 2026 guidance, leadership transitions (CEO retirement intention and CFO resignation), and some cost/input pressures. The positives demonstrate product momentum and a clear strategic plan, but the geopolitical exposure and guidance pause introduce material short-term uncertainty.Positive Updates
Successful Launch of PX Q650
Launched PX Q650 in March 2026, secured first commercial order and engaged multiple large customers to design the product into large desalination plants; management describes early commercial momentum and expects a multi-year transition to make Q650 the primary product (management estimates that transition could complete by 2028).
Negative Updates
Guidance Withdrawn Due to Middle East Conflict
Company temporarily withdrew 2026 financial guidance because of meaningful exposure to the Middle East and uncertainty related to the war in Iran; management will pause guidance updates until visibility improves (potential update in Q2 or Q3).
Read all updates
Q1-2026 Updates
Positive
Negative
Successful Launch of PX Q650
Launched PX Q650 in March 2026, secured first commercial order and engaged multiple large customers to design the product into large desalination plants; management describes early commercial momentum and expects a multi-year transition to make Q650 the primary product (management estimates that transition could complete by 2028).
Read all positive updates
Company Guidance
On the May 6, 2026 FY2026 Q1 call Energy Recovery said it is temporarily withdrawing its original 2026 financial guidance and pausing guidance on both desalination and wastewater (the prior wastewater outlook of $10–15 million for 2026 is on hold), with an expectation to refresh overall guidance in Q2 or Q3 2026; management is building inventory to serve projects expected over the next 12–24 months, continues to target beginning overseas Q400 assembly/manufacturing “by Q1,” noted the PX Q650 was launched in March 2026 with a first commercial order and that the Q650-to-primary transition may take until ~2028 (similar to the ~2+ year Q300→Q400 transition), and reiterated cost-discipline actions (reductions-in-force last year and earlier this year, lean/Kaizen manufacturing improvements) with no large one‑time SG&A cuts remaining.Energy Recovery Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
90
Very Positive
Cash Flow
76
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 136.34M | 134.70M | 144.95M | 128.35M | 125.59M | 103.90M |
| Gross Profit | 87.66M | 87.78M | 96.93M | 87.08M | 87.36M | 71.23M |
| EBITDA | 38.75M | 31.36M | 28.02M | 24.80M | 31.13M | 19.77M |
| Net Income | 20.59M | 22.96M | 23.05M | 21.50M | 24.05M | 14.27M |
Balance Sheet | ||||||
| Total Assets | 208.99M | 231.51M | 242.79M | 252.97M | 217.04M | 213.69M |
| Cash, Cash Equivalents and Short-Term Investments | 86.15M | 75.25M | 78.02M | 108.54M | 89.83M | 105.69M |
| Total Debt | 8.85M | 9.43M | 11.32M | 13.28M | 14.88M | 16.44M |
| Total Liabilities | 24.70M | 25.32M | 32.78M | 33.17M | 31.70M | 34.91M |
| Stockholders Equity | 184.28M | 206.19M | 210.01M | 219.81M | 185.34M | 178.78M |
Cash Flow | ||||||
| Free Cash Flow | 27.18M | 17.44M | 19.22M | 23.49M | 9.50M | 6.85M |
| Operating Cash Flow | 29.13M | 18.77M | 20.52M | 26.05M | 12.63M | 13.53M |
| Investing Cash Flow | 13.71M | 33.98M | -15.65M | -19.11M | -6.95M | -20.56M |
| Financing Cash Flow | -42.04M | -34.53M | -43.28M | 4.79M | -23.67M | -12.79M |
Energy Recovery Technical Analysis
Negative
10.58
Price Trends
11.90
Negative
13.10
Negative
13.93
Negative
Market Momentum
-0.15
Negative
45.78
Neutral
30.19
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 10.58 is above the 20-day moving average (MA) of 10.40, below the 50-day MA of 11.90, and below the 200-day MA of 13.93, indicating a neutral trend. The MACD of -0.15 indicates Negative momentum. The RSI at 45.78 is Neutral, neither overbought nor oversold. The STOCH value of 30.19 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 |
|---|---|---|---|---|---|---|---|
73 Outperform | $3.09B | 173.67 | 5.54% | ― | 32.11% | -71.47% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $444.32M | -10.82 | 10.89% | ― | -3.05% | 4.46% | |
57 Neutral | $45.19M | -7.00 | -7.34% | ― | -0.69% | 1.97% | |
52 Neutral | $28.15M | -24.81 | -53.54% | ― | 45.55% | 11.30% | |
51 Neutral | $112.90M | -31.72 | -27.88% | ― | 6.71% | -3120.50% | |
50 Neutral | $21.09M | -1.74 | -73.79% | ― | 6.94% | 38.10% |
* Industrials Sector Average
ERII
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Energy Recovery Corporate Events
Business Operations and StrategyExecutive/Board ChangesStock BuybackFinancial Disclosures
Energy Recovery Posts Losses Amid Leadership Changes, Buyback Plan
Negative
May 6, 2026
On May 6, 2026, Energy Recovery reported first-quarter 2026 results showing revenue of $9.7 million, up 20% year-on-year, but a sharply lower gross margin of 27.8% due largely to restructuring and goodwill impairment charges tied to the wind-down ...
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.