ENERGY RECOVERY INC (ERII) Stock Fundamental Analysis
NASDAQ:ERII - Nasdaq - US29270J1007 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to ERII. ERII was compared to 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. With these ratings, ERII could be worth investigating further for growth investing!.
1. Profitability
1.1 Basic Checks
In the past year ERII was profitable.
ERII had a positive operating cash flow in the past year.
In the past 5 years ERII has always been profitable.
ERII had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 9.51%, ERII is in the better half of the industry, outperforming 78.13% of the companies in the same industry.
Looking at the Return On Equity, with a value of 10.82%, ERII is in line with its industry, outperforming 57.03% of the companies in the same industry.
ERII's Return On Invested Capital of 8.06% is in line compared to the rest of the industry. ERII outperforms 57.81% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ERII is below the industry average of 10.69%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.51% | ||
| ROE | 10.82% | ||
| ROIC | 8.06% |
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
ERII has a Profit Margin of 15.21%. This is amongst the best in the industry. ERII outperforms 86.72% of its industry peers.
ERII's Profit Margin has improved in the last couple of years.
The Operating Margin of ERII (14.98%) is better than 70.31% of its industry peers.
In the last couple of years the Operating Margin of ERII has grown nicely.
The Gross Margin of ERII (66.88%) is better than 98.44% of its industry peers.
ERII's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14.98% | ||
| PM (TTM) | 15.21% | ||
| GM | 66.88% |
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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so ERII is destroying value.
Compared to 1 year ago, ERII has less shares outstanding
The number of shares outstanding for ERII has been reduced compared to 5 years ago.
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.
2.2 Solvency
An Altman-Z score of 18.29 indicates that ERII is not in any danger for bankruptcy at the moment.
The Altman-Z score of ERII (18.29) is better than 96.88% 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 | 18.29 |
ROIC/WACC0.81
WACC9.92%
2.3 Liquidity
ERII has a Current Ratio of 8.39. This indicates that ERII is financially healthy and has no problem in meeting its short term obligations.
ERII has a Current ratio of 8.39. This is amongst the best in the industry. ERII outperforms 95.31% of its industry peers.
ERII has a Quick Ratio of 6.63. This indicates that ERII is financially healthy and has no problem in meeting its short term obligations.
ERII has a better Quick ratio (6.63) than 95.31% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 8.39 | ||
| Quick Ratio | 6.63 |
3. Growth
3.1 Past
ERII shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 67.65%, which is quite impressive.
The Earnings Per Share has been growing by 27.65% on average over the past years. This is a very strong growth
Looking at the last year, ERII shows a quite strong growth in Revenue. The Revenue has grown by 10.93% in the last year.
Measured over the past years, ERII shows a quite strong growth in Revenue. The Revenue has been growing by 10.77% on average per year.
EPS 1Y (TTM)67.65%
EPS 3Y34.63%
EPS 5Y27.65%
EPS Q2Q%-28.57%
Revenue 1Y (TTM)10.93%
Revenue growth 3Y11.74%
Revenue growth 5Y10.77%
Sales Q2Q%-33.29%
3.2 Future
Based on estimates for the next years, ERII will show a quite strong growth in Earnings Per Share. The EPS will grow by 12.43% on average per year.
The Revenue is expected to grow by 12.54% on average over the next years. This is quite good.
EPS Next Y-9.7%
EPS Next 2Y8.19%
EPS Next 3Y12.43%
EPS Next 5YN/A
Revenue Next Year2.75%
Revenue Next 2Y7.74%
Revenue Next 3Y12.54%
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
ERII is valuated rather expensively with a Price/Earnings ratio of 23.09.
Compared to the rest of the industry, the Price/Earnings ratio of ERII is on the same level as its industry peers.
ERII's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.30.
Based on the Price/Forward Earnings ratio of 18.43, the valuation of ERII can be described as rather expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ERII is on the same level as its industry peers.
The average S&P500 Price/Forward Earnings ratio is at 21.76. ERII is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.09 | ||
| Fwd PE | 18.43 |
4.2 Price Multiples
ERII's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. ERII is more expensive than 69.53% of the companies in the same industry.
The rest of the industry has a similar Price/Free Cash Flow ratio as ERII.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 29.84 | ||
| EV/EBITDA | 24.36 |
4.3 Compensation for Growth
The decent profitability rating of ERII may justify a higher PE ratio.
ERII's earnings are expected to grow with 12.43% in the coming years. This may justify a more expensive valuation.
PEG (NY)N/A
PEG (5Y)0.84
EPS Next 2Y8.19%
EPS Next 3Y12.43%
5. Dividend
5.1 Amount
ERII does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
13.16
-0.22 (-1.64%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners87.48%
Inst Owner Change0%
Ins Owners2.81%
Ins Owner Change0.81%
Market Cap717.22M
Analysts82.22
Price Target14.79 (12.39%)
Short Float %1.88%
Short Ratio1.89
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)1
Avg EPS beat(2)-235.55%
Min EPS beat(2)-488.23%
Max EPS beat(2)17.13%
EPS beat(4)3
Avg EPS beat(4)-86.08%
Min EPS beat(4)-488.23%
Max EPS beat(4)63.4%
EPS beat(8)4
Avg EPS beat(8)-41.79%
EPS beat(12)6
Avg EPS beat(12)-23.55%
EPS beat(16)9
Avg EPS beat(16)22.13%
Revenue beat(2)0
Avg Revenue beat(2)-33.08%
Min Revenue beat(2)-63.91%
Max Revenue beat(2)-2.24%
Revenue beat(4)0
Avg Revenue beat(4)-18.17%
Min Revenue beat(4)-63.91%
Max Revenue beat(4)-2.24%
Revenue beat(8)1
Avg Revenue beat(8)-12.21%
Revenue beat(12)3
Avg Revenue beat(12)-9.99%
Revenue beat(16)5
Avg Revenue beat(16)-7.11%
PT rev (1m)-26.27%
PT rev (3m)-26.27%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-94.12%
EPS NY rev (1m)-7.43%
EPS NY rev (3m)-10.99%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-16.43%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-6.34%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.09 | ||
| Fwd PE | 18.43 | ||
| P/S | 5.09 | ||
| P/FCF | 29.84 | ||
| P/OCF | 29.03 | ||
| P/B | 3.62 | ||
| P/tB | 3.87 | ||
| EV/EBITDA | 24.36 |
EPS(TTM)0.57
EY4.33%
EPS(NY)0.71
Fwd EY5.43%
FCF(TTM)0.44
FCFY3.35%
OCF(TTM)0.45
OCFY3.44%
SpS2.59
BVpS3.64
TBVpS3.4
PEG (NY)N/A
PEG (5Y)0.84
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.51% | ||
| ROE | 10.82% | ||
| ROCE | 10.2% | ||
| ROIC | 8.06% | ||
| ROICexc | 13.51% | ||
| ROICexgc | 15.08% | ||
| OM | 14.98% | ||
| PM (TTM) | 15.21% | ||
| GM | 66.88% | ||
| FCFM | 17.06% |
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-Score7
Asset Turnover0.63
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 16.71% | ||
| Cap/Sales | 0.47% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 98.46% | ||
| Profit Quality | 112.17% | ||
| Current Ratio | 8.39 | ||
| Quick Ratio | 6.63 | ||
| Altman-Z | 18.29 |
F-Score7
WACC9.92%
ROIC/WACC0.81
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)67.65%
EPS 3Y34.63%
EPS 5Y27.65%
EPS Q2Q%-28.57%
EPS Next Y-9.7%
EPS Next 2Y8.19%
EPS Next 3Y12.43%
EPS Next 5YN/A
Revenue 1Y (TTM)10.93%
Revenue growth 3Y11.74%
Revenue growth 5Y10.77%
Sales Q2Q%-33.29%
Revenue Next Year2.75%
Revenue Next 2Y7.74%
Revenue Next 3Y12.54%
Revenue Next 5YN/A
EBIT growth 1Y30.1%
EBIT growth 3Y17.08%
EBIT growth 5Y16.38%
EBIT Next Year140.1%
EBIT Next 3Y54.42%
EBIT Next 5YN/A
FCF growth 1Y17.62%
FCF growth 3Y41.07%
FCF growth 5YN/A
OCF growth 1Y7.92%
OCF growth 3Y14.91%
OCF growth 5Y31.24%