Energy Recovery, Inc.
Energy Recovery, Inc. Fundamental Analysis
Energy Recovery, Inc. (ERII) shows moderate financial fundamentals with a PE ratio of 23.31, profit margin of 15.10%, and ROE of 10.89%. The company generates $0.1B in annual revenue with weak year-over-year growth of -7.07%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 45.4/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze ERII's fundamental strength across five key dimensions:
Efficiency Score
WeakERII struggles to generate sufficient returns from assets.
Valuation Score
ModerateERII shows balanced valuation metrics.
Growth Score
WeakERII faces weak or negative growth trends.
Financial Health Score
ExcellentERII maintains a strong and stable balance sheet.
Profitability Score
ModerateERII maintains healthy but balanced margins.
Key Financial Metrics
Is ERII Expensive or Cheap?
P/E Ratio
ERII trades at 23.31 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, ERII's PEG of 4.31 indicates potential overvaluation.
Price to Book
The market values Energy Recovery, Inc. at 2.60 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 12.12 times EBITDA. This signals the market has high growth expectations.
How Well Does ERII Make Money?
Net Profit Margin
For every $100 in sales, Energy Recovery, Inc. keeps $15.10 as profit after all expenses.
Operating Margin
Core operations generate 19.87 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $10.89 in profit for every $100 of shareholder equity.
ROA
Energy Recovery, Inc. generates $9.85 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Energy Recovery, Inc. produces operating cash flow of $28.51M, showing steady but balanced cash generation.
Free Cash Flow
Energy Recovery, Inc. generates strong free cash flow of $26.60M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $0.52 in free cash annually.
FCF Yield
ERII converts 5.80% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
23.31
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
4.31
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.60
vs 25 benchmark
P/S Ratio
Price to sales ratio
3.45
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.05
vs 25 benchmark
Current Ratio
Current assets to current liabilities
9.28
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.11
vs 25 benchmark
ROA
Return on assets percentage
0.10
vs 25 benchmark
ROCE
Return on capital employed
0.14
vs 25 benchmark
How ERII Stacks Against Its Sector Peers
| Metric | ERII Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 23.31 | 26.78 | Better (Cheaper) |
| ROE | 10.89% | 1280.00% | Weak |
| Net Margin | 15.10% | -41741.00% (disorted) | Strong |
| Debt/Equity | 0.05 | 0.69 | Strong (Low Leverage) |
| Current Ratio | 9.28 | 8.99 | Strong Liquidity |
| ROA | 9.85% | -1505887.00% (disorted) | Weak |
ERII outperforms its industry in 4 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Energy Recovery, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
51.46%
Industry Style: Cyclical, Value, Infrastructure
High GrowthEPS CAGR
-9.90%
Industry Style: Cyclical, Value, Infrastructure
DecliningFCF CAGR
15.21%
Industry Style: Cyclical, Value, Infrastructure
High Growth