ENERGY RECOVERY INC (ERII) Stock Fundamental Analysis
NASDAQ:ERII - Nasdaq - US29270J1007 - Common Stock - Currency: USD
Overall ERII gets a fundamental rating of 6 out of 10. We evaluated ERII against 128 industry peers in the Machinery industry. While ERII has a great health rating, its profitability is only average at the moment. ERII is valued quite expensively, but it does show have an excellent growth rating. These ratings would make ERII suitable for growth investing!
1. Profitability
1.1 Basic Checks
ERII had positive earnings in the past year.
ERII had a positive operating cash flow in the past year.
Each year in the past 5 years ERII has been profitable.
Each year in the past 5 years ERII had a positive operating cash flow.
1.2 Ratios
ERII has a better Return On Assets (9.49%) than 76.56% of its industry peers.
ERII's Return On Equity of 10.98% is in line compared to the rest of the industry. ERII outperforms 58.59% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.99%, ERII is in line with its industry, outperforming 56.25% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ERII is below the industry average of 10.75%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.49% | ||
| ROE | 10.98% | ||
| ROIC | 7.99% |
ROA(3y)9.69%
ROA(5y)9.73%
ROE(3y)11.24%
ROE(5y)11.42%
ROIC(3y)8.12%
ROIC(5y)8.81%
1.3 Margins
The Profit Margin of ERII (15.90%) is better than 90.63% of its industry peers.
In the last couple of years the Profit Margin of ERII has grown nicely.
Looking at the Operating Margin, with a value of 15.32%, ERII is in the better half of the industry, outperforming 75.00% of the companies in the same industry.
In the last couple of years the Operating Margin of ERII has grown nicely.
Looking at the Gross Margin, with a value of 66.87%, ERII belongs to the top of the industry, outperforming 99.22% of the companies in the same industry.
In the last couple of years the Gross Margin of ERII has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.32% | ||
| PM (TTM) | 15.9% | ||
| GM | 66.87% |
OM growth 3Y4.79%
OM growth 5Y5.06%
PM growth 3Y5.01%
PM growth 5Y4.86%
GM growth 3Y-0.83%
GM growth 5Y-2.69%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), ERII is destroying value.
The number of shares outstanding for ERII has been reduced compared to 1 year ago.
The number of shares outstanding for ERII has been reduced compared to 5 years ago.
ERII has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
2.2 Solvency
ERII has an Altman-Z score of 17.17. This indicates that ERII is financially healthy and has little risk of bankruptcy at the moment.
ERII has a better Altman-Z score (17.17) than 97.66% of its industry peers.
There is no outstanding debt for ERII. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 17.17 |
ROIC/WACC0.8
WACC9.99%
2.3 Liquidity
ERII has a Current Ratio of 7.41. This indicates that ERII is financially healthy and has no problem in meeting its short term obligations.
ERII's Current ratio of 7.41 is amongst the best of the industry. ERII outperforms 95.31% of its industry peers.
ERII has a Quick Ratio of 6.35. This indicates that ERII is financially healthy and has no problem in meeting its short term obligations.
ERII has a better Quick ratio (6.35) than 95.31% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 7.41 | ||
| Quick Ratio | 6.35 |
3. Growth
3.1 Past
ERII shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 54.05%, which is quite impressive.
ERII shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 25.93% yearly.
The Revenue has grown by 12.93% in the past year. This is quite good.
ERII shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 10.77% yearly.
EPS 1Y (TTM)54.05%
EPS 3Y31.62%
EPS 5Y25.93%
EPS Q2Q%20.59%
Revenue 1Y (TTM)12.93%
Revenue growth 3Y11.74%
Revenue growth 5Y10.77%
Sales Q2Q%17.29%
3.2 Future
ERII is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 16.34% yearly.
ERII is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 12.79% yearly.
EPS Next Y8.56%
EPS Next 2Y16.62%
EPS Next 3Y16.34%
EPS Next 5YN/A
Revenue Next Year9.7%
Revenue Next 2Y10.42%
Revenue Next 3Y12.79%
Revenue Next 5YN/A
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 25.67 indicates a quite expensive valuation of ERII.
Compared to the rest of the industry, the Price/Earnings ratio of ERII indicates a slightly more expensive valuation: ERII is more expensive than 64.84% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 27.63. ERII is around the same levels.
Based on the Price/Forward Earnings ratio of 23.64, the valuation of ERII can be described as rather expensive.
The rest of the industry has a similar Price/Forward Earnings ratio as ERII.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.85, ERII is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.67 | ||
| Fwd PE | 23.64 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ERII indicates a slightly more expensive valuation: ERII is more expensive than 70.31% of the companies listed in the same industry.
64.06% of the companies in the same industry are cheaper than ERII, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 41.83 | ||
| EV/EBITDA | 26.24 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of ERII may justify a higher PE ratio.
ERII's earnings are expected to grow with 16.34% in the coming years. This may justify a more expensive valuation.
PEG (NY)3
PEG (5Y)0.99
EPS Next 2Y16.62%
EPS Next 3Y16.34%
5. Dividend
5.1 Amount
ERII does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
14.63
-0.2 (-1.35%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners85.53%
Inst Owner Change-0.1%
Ins Owners2.62%
Ins Owner Change-1.67%
Market Cap804.06M
Analysts80
Price Target20.06 (37.12%)
Short Float %2.18%
Short Ratio3.68
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)35.06%
Min EPS beat(2)6.71%
Max EPS beat(2)63.4%
EPS beat(4)3
Avg EPS beat(4)32.96%
Min EPS beat(4)-1.67%
Max EPS beat(4)63.4%
EPS beat(8)5
Avg EPS beat(8)20.33%
EPS beat(12)7
Avg EPS beat(12)26.23%
EPS beat(16)10
Avg EPS beat(16)57.36%
Revenue beat(2)0
Avg Revenue beat(2)-2.76%
Min Revenue beat(2)-3.27%
Max Revenue beat(2)-2.24%
Revenue beat(4)0
Avg Revenue beat(4)-5.24%
Min Revenue beat(4)-12.17%
Max Revenue beat(4)-2.24%
Revenue beat(8)2
Avg Revenue beat(8)-4.09%
Revenue beat(12)4
Avg Revenue beat(12)-3.83%
Revenue beat(16)5
Avg Revenue beat(16)-3.65%
PT rev (1m)1.72%
PT rev (3m)-5.22%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-79.96%
EPS NY rev (1m)6.43%
EPS NY rev (3m)7.06%
Revenue NQ rev (1m)18.69%
Revenue NQ rev (3m)-17.85%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-2.49%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.67 | ||
| Fwd PE | 23.64 | ||
| P/S | 5.55 | ||
| P/FCF | 41.83 | ||
| P/OCF | 39.18 | ||
| P/B | 3.83 | ||
| P/tB | 4.08 | ||
| EV/EBITDA | 26.24 |
EPS(TTM)0.57
EY3.9%
EPS(NY)0.62
Fwd EY4.23%
FCF(TTM)0.35
FCFY2.39%
OCF(TTM)0.37
OCFY2.55%
SpS2.64
BVpS3.82
TBVpS3.59
PEG (NY)3
PEG (5Y)0.99
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.49% | ||
| ROE | 10.98% | ||
| ROCE | 10.12% | ||
| ROIC | 7.99% | ||
| ROICexc | 12.41% | ||
| ROICexgc | 13.64% | ||
| OM | 15.32% | ||
| PM (TTM) | 15.9% | ||
| GM | 66.87% | ||
| FCFM | 13.26% |
ROA(3y)9.69%
ROA(5y)9.73%
ROE(3y)11.24%
ROE(5y)11.42%
ROIC(3y)8.12%
ROIC(5y)8.81%
ROICexc(3y)14.22%
ROICexc(5y)18.19%
ROICexgc(3y)15.9%
ROICexgc(5y)21.13%
ROCE(3y)10.28%
ROCE(5y)11.16%
ROICexcg growth 3Y-2%
ROICexcg growth 5Y0.91%
ROICexc growth 3Y0.06%
ROICexc growth 5Y2.77%
OM growth 3Y4.79%
OM growth 5Y5.06%
PM growth 3Y5.01%
PM growth 5Y4.86%
GM growth 3Y-0.83%
GM growth 5Y-2.69%
F-Score6
Asset Turnover0.6
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 32.08% | ||
| Cap/Sales | 0.9% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 78.19% | ||
| Profit Quality | 83.4% | ||
| Current Ratio | 7.41 | ||
| Quick Ratio | 6.35 | ||
| Altman-Z | 17.17 |
F-Score6
WACC9.99%
ROIC/WACC0.8
Cap/Depr(3y)61.16%
Cap/Depr(5y)84.81%
Cap/Sales(3y)2.09%
Cap/Sales(5y)3.68%
Profit Quality(3y)75.85%
Profit Quality(5y)62.74%
High Growth Momentum
Growth
EPS 1Y (TTM)54.05%
EPS 3Y31.62%
EPS 5Y25.93%
EPS Q2Q%20.59%
EPS Next Y8.56%
EPS Next 2Y16.62%
EPS Next 3Y16.34%
EPS Next 5YN/A
Revenue 1Y (TTM)12.93%
Revenue growth 3Y11.74%
Revenue growth 5Y10.77%
Sales Q2Q%17.29%
Revenue Next Year9.7%
Revenue Next 2Y10.42%
Revenue Next 3Y12.79%
Revenue Next 5YN/A
EBIT growth 1Y16.54%
EBIT growth 3Y17.08%
EBIT growth 5Y16.38%
EBIT Next Year172.52%
EBIT Next 3Y54.42%
EBIT Next 5YN/A
FCF growth 1Y-18.15%
FCF growth 3Y41.07%
FCF growth 5YN/A
OCF growth 1Y-21.23%
OCF growth 3Y14.91%
OCF growth 5Y31.24%