Energy Recovery, Inc.
$8.04
-1.7%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.
At a Glance
Live SnapshotIntrinsic Alpha Methodology
Thesis Lenses
Signal
High confidenceValuation multiple is mid-range (P/E 18.7).
Valuation inputs: P/E 18.7, earnings yield +5.3%, momentum -1.7%.
If multiples stay elevated while momentum fades, downside repricing risk rises.
Driver
High confidenceReturn profile is acceptable (ROE +11.1%, ROIC +9.4%).
Profitability stack: net margin +17.1%, ROE +11.1%, ROIC +9.4%.
Quality deterioration often appears in margins before it shows up in headline EPS.
Risk
High confidenceDownside profile looks controlled across current risk inputs.
Risk factors: liabilities/assets +10.9%, momentum -1.7%, net margin +17.1%.
Higher leverage with weak momentum and thin margins can amplify drawdown severity.
Energy Recovery, Inc. Market vs Earnings Trajectory
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Energy Recovery, Inc. Fair Value Envelope
Energy Recovery, Inc. Profit Bridge
Profitability Analysis
Gross Margin
Exceptional pricing power and cost management. The company retains over half of revenue after direct costs.
Operating Margin
Healthy operating margins demonstrate effective cost control and strong business fundamentals.
Net Profit Margin
Strong net margins indicate efficient operations and favorable tax/interest management.
Effective Tax Rate
Moderate tax rate typical for most corporations. Represents standard tax burden on profits.
Profitability Insight
High margin compression: Large gap between gross and net margins suggests operational inefficiencies or heavy debt burden. Focus on expense management and deleveraging.
Energy Recovery, Inc. Cash Conversion Engine
Cash Flow Quality Analysis
FCF Conversion Rate
Moderate conversion rate. Some gap between earnings and cash flow may warrant investigation into working capital or non-cash items.
CapEx Intensity
Asset-light business model. Low capital requirements leave more cash available for shareholders and growth investments.
FCF Growth Trend
Declining FCF warrants attention. Investigate whether due to temporary factors or fundamental deterioration.
Working Capital Impact
Significant working capital drain. Growth may be consuming cash through inventory buildup or receivables extension—monitor closely.
Cash Flow Quality Insight
Working capital strain: Significant cash tied up in operations. Monitor receivables collection, inventory turns, and payment terms to optimize cash conversion cycle.
Energy Recovery, Inc. Funding & Solvency Profile
Financial Health Analysis
Current Ratio
Excellent liquidity position. The company can easily cover its short-term obligations with substantial cushion.
Debt-to-Equity Ratio
Conservative capital structure. The company relies primarily on equity financing, indicating low financial risk.
Working Capital
Strong working capital position provides significant operational flexibility and financial cushion.
Asset Composition
Asset-light business model with high liquidity. Majority of assets are easily convertible to cash.
Financial Health Insight
Strong financial foundation: Excellent liquidity combined with conservative leverage suggests the company is well-positioned to weather economic uncertainties and fund growth opportunities.
Energy Recovery, Inc. Street Expectations Map
Wall Street analysts project that ERII stock may rise significantly over the coming 12 months. The consensus 1-year price target stands at 12.50, with estimates ranging from a low of 12.00 to a high of 13.00.
The consensus 1-year price target stands at 12.50, with estimates ranging from a low of 12.00 to a high of 13.00.
Analyst Consensus Analysis
Upside Potential
Substantial upside potential. Analysts see significant value gap, suggesting the stock may be materially undervalued at current levels.
Analyst Agreement
High analyst agreement. Narrow target range indicates strong consensus on valuation, suggesting clear investment thesis and predictable outlook.
Analyst Conviction
Strong buy conviction: High upside with tight consensus suggests compelling investment opportunity backed by analyst confidence.
Market Sentiment Insight
Rare opportunity: Exceptional upside potential with strong analyst consensus creates a compelling setup. The combination of significant price target premium and tight agreement suggests high-conviction undervaluation that may attract institutional capital.
Energy Recovery, Inc. Insider Positioning
During the last 12 months, insiders have purchased $224K and sold $3.39M worth of ERII shares, resulting in $3.16M of net selling activity.
3 Months
20.0K
166.84K
204.3K
2.10M
-1.9M
-$1.93M
3-6 Months
0
0.00
69.5K
782.30K
-782K
-$782K
6-9 Months
5.6K
57.45K
33.5K
506.88K
-449K
-$449K
9-12 Months
0
0.00
0
0.00
+0
+$0
Top Buyers
Tondreau Pamela L.
Director
$167K
Yeung William
Officer: Chief Legal Officer
$57K
Top Sellers
Hanstveit Arve
Director
$2.95M
Clemente Rodney
Officer: Svp, Water
$229K
Yeung William
Officer: Chief Legal Officer
$201K
Ramanan Natarajan
Officer: Chief Technology Officer
$3K
Insider Activity Analysis
Net Insider Sentiment
Strong bearish signal with $3.16M net selling. Heavy insider selling may indicate concerns about valuation or near-term prospects.
Buy/Sell Ratio
Very poor ratio. Heavy selling with minimal buying suggests insiders may be concerned about valuation or outlook.
Recent Trend (3 Months)
Heavy recent selling activity. Recent insider sales notably exceed purchases—may warrant investigation into company developments.
Insider Participation
4 insider sellers vs. 2 buyers. More insiders selling than buying suggests cautious or negative sentiment.
Insider Activity Insight
Multiple red flags: Heavy selling, numerous sellers, and continued recent selling create a concerning pattern. Investigate fundamental drivers and consider whether company guidance or industry conditions have deteriorated.
No Dividend Yield Data
ERII has not reported any dividend yield values in the available annual periods.
erii Dividend History
Learning Layer
Related Guides
Build conviction on ERII by pairing this stock hub with focused valuation guides.
Research Paths
Snapshot
Start with context, operating signals, and key market metrics.
Value Model
Stress test fair value across bear, base, and bull assumptions.
Statements
Validate revenue quality, margins, and balance sheet durability.
Earnings Call
Read management commentary and compare it with reported outcomes.
Dividends
Check payout sustainability and long-term distribution behavior.
Analyst Expectations
Review consensus spread and where estimate risk is concentrated.