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 129 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 expensive, but it does show an excellent growth. These ratings would make ERII suitable for growth investing!
1. Profitability
1.1 Basic Checks
In the past year ERII was profitable.
In the past year ERII had a positive cash flow from operations.
Each year in the past 5 years ERII has been profitable.
ERII had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of ERII (7.38%) is better than 68.80% of its industry peers.
With a Return On Equity value of 8.29%, ERII perfoms like the industry average, outperforming 52.80% of the companies in the same industry.
ERII's Return On Invested Capital of 4.77% is on the low side compared to the rest of the industry. ERII is outperformed by 62.40% of its industry peers.
ERII had an Average Return On Invested Capital over the past 3 years of 7.34%. This is below the industry average of 11.00%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.38% | ||
| ROE | 8.29% | ||
| ROIC | 4.77% |
ROA(3y)8.75%
ROA(5y)8.99%
ROE(3y)10.25%
ROE(5y)10.83%
ROIC(3y)7.34%
ROIC(5y)8.24%
1.3 Margins
With an excellent Profit Margin value of 14.35%, ERII belongs to the best of the industry, outperforming 88.00% of the companies in the same industry.
In the last couple of years the Profit Margin of ERII has declined.
ERII's Operating Margin of 10.90% is in line compared to the rest of the industry. ERII outperforms 57.60% of its industry peers.
In the last couple of years the Operating Margin of ERII has grown nicely.
With an excellent Gross Margin value of 66.13%, ERII belongs to the best of the industry, outperforming 99.20% of the companies in the same industry.
ERII's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.9% | ||
| PM (TTM) | 14.35% | ||
| GM | 66.13% |
OM growth 3Y-19.29%
OM growth 5Y2.03%
PM growth 3Y-8.93%
PM growth 5Y-10.8%
GM growth 3Y-3.8%
GM growth 5Y-2.24%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so ERII is destroying value.
ERII has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, ERII has more shares outstanding
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
An Altman-Z score of 20.57 indicates that ERII is not in any danger for bankruptcy at the moment.
ERII has a better Altman-Z score (20.57) than 97.60% 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 | 20.57 |
ROIC/WACC0.45
WACC10.6%
2.3 Liquidity
ERII has a Current Ratio of 10.06. This indicates that ERII is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of ERII (10.06) is better than 96.00% of its industry peers.
ERII has a Quick Ratio of 8.29. This indicates that ERII is financially healthy and has no problem in meeting its short term obligations.
Looking at the Quick ratio, with a value of 8.29, ERII belongs to the top of the industry, outperforming 96.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 10.06 | ||
| Quick Ratio | 8.29 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 25.93% over the past year.
The Earnings Per Share has been growing by 14.26% on average over the past years. This is quite good.
ERII shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 19.05%.
Measured over the past years, ERII shows a quite strong growth in Revenue. The Revenue has been growing by 11.49% on average per year.
EPS 1Y (TTM)25.93%
EPS 3Y-9.55%
EPS 5Y14.26%
EPS Q2Q%-11.76%
Revenue 1Y (TTM)19.05%
Revenue growth 3Y2.55%
Revenue growth 5Y11.49%
Sales Q2Q%4.18%
3.2 Future
ERII is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 27.40% yearly.
Based on estimates for the next years, ERII will show a quite strong growth in Revenue. The Revenue will grow by 9.49% on average per year.
EPS Next Y0.16%
EPS Next 2Y25.35%
EPS Next 3Y27.4%
EPS Next 5YN/A
Revenue Next Year7.67%
Revenue Next 2Y8.71%
Revenue Next 3Y9.49%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 43.09 indicates a quite expensive valuation of ERII.
72.00% of the companies in the same industry are cheaper than ERII, based on the Price/Earnings ratio.
ERII is valuated rather expensively when we compare the Price/Earnings ratio to 29.63, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 25.20 indicates a quite expensive valuation of ERII.
ERII's Price/Forward Earnings is on the same level as the industry average.
ERII is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.68, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.09 | ||
| Fwd PE | 25.2 |
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 71.20% of the companies listed 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 | 37.25 | ||
| EV/EBITDA | 38.41 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ERII does not grow enough to justify the current Price/Earnings ratio.
ERII's earnings are expected to grow with 27.40% in the coming years. This may justify a more expensive valuation.
PEG (NY)267.23
PEG (5Y)3.02
EPS Next 2Y25.35%
EPS Next 3Y27.4%
5. Dividend
5.1 Amount
No dividends for ERII!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
14.65
-0.83 (-5.36%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners85.53%
Inst Owner Change-5.12%
Ins Owners2.62%
Ins Owner Change1.12%
Market Cap848.09M
Analysts80
Price Target19.72 (34.61%)
Short Float %2.65%
Short Ratio4.83
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)77.34%
Min EPS beat(2)63.4%
Max EPS beat(2)91.29%
EPS beat(4)2
Avg EPS beat(4)35.33%
Min EPS beat(4)-11.7%
Max EPS beat(4)91.29%
EPS beat(8)5
Avg EPS beat(8)29.65%
EPS beat(12)6
Avg EPS beat(12)26.15%
EPS beat(16)10
Avg EPS beat(16)60.91%
Revenue beat(2)1
Avg Revenue beat(2)6.65%
Min Revenue beat(2)-3.27%
Max Revenue beat(2)16.56%
Revenue beat(4)1
Avg Revenue beat(4)-2.67%
Min Revenue beat(4)-12.17%
Max Revenue beat(4)16.56%
Revenue beat(8)4
Avg Revenue beat(8)-1.02%
Revenue beat(12)6
Avg Revenue beat(12)-1.65%
Revenue beat(16)7
Avg Revenue beat(16)-2.06%
PT rev (1m)-0.4%
PT rev (3m)0.81%
EPS NQ rev (1m)-6.92%
EPS NQ rev (3m)-9.2%
EPS NY rev (1m)-5.63%
EPS NY rev (3m)1.63%
Revenue NQ rev (1m)-1.89%
Revenue NQ rev (3m)-2.21%
Revenue NY rev (1m)-0.45%
Revenue NY rev (3m)-1.2%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.09 | ||
| Fwd PE | 25.2 | ||
| P/S | 6.28 | ||
| P/FCF | 37.25 | ||
| P/OCF | 33.46 | ||
| P/B | 3.63 | ||
| P/tB | 3.84 | ||
| EV/EBITDA | 38.41 |
EPS(TTM)0.34
EY2.32%
EPS(NY)0.58
Fwd EY3.97%
FCF(TTM)0.39
FCFY2.68%
OCF(TTM)0.44
OCFY2.99%
SpS2.33
BVpS4.04
TBVpS3.82
PEG (NY)267.23
PEG (5Y)3.02
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.38% | ||
| ROE | 8.29% | ||
| ROCE | 6.04% | ||
| ROIC | 4.77% | ||
| ROICexc | 9.29% | ||
| ROICexgc | 10.35% | ||
| OM | 10.9% | ||
| PM (TTM) | 14.35% | ||
| GM | 66.13% | ||
| FCFM | 16.86% |
ROA(3y)8.75%
ROA(5y)8.99%
ROE(3y)10.25%
ROE(5y)10.83%
ROIC(3y)7.34%
ROIC(5y)8.24%
ROICexc(3y)14.21%
ROICexc(5y)17.88%
ROICexgc(3y)16.19%
ROICexgc(5y)21.01%
ROCE(3y)9.29%
ROCE(5y)10.43%
ROICexcg growth 3Y-32%
ROICexcg growth 5Y-5.32%
ROICexc growth 3Y-30.15%
ROICexc growth 5Y-2.32%
OM growth 3Y-19.29%
OM growth 5Y2.03%
PM growth 3Y-8.93%
PM growth 5Y-10.8%
GM growth 3Y-3.8%
GM growth 5Y-2.24%
F-Score7
Asset Turnover0.51
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 63.33% | ||
| Cap/Sales | 1.91% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 134.84% | ||
| Profit Quality | 117.45% | ||
| Current Ratio | 10.06 | ||
| Quick Ratio | 8.29 | ||
| Altman-Z | 20.57 |
F-Score7
WACC10.6%
ROIC/WACC0.45
Cap/Depr(3y)87.96%
Cap/Depr(5y)111.94%
Cap/Sales(3y)3.93%
Cap/Sales(5y)5.2%
Profit Quality(3y)64.04%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)25.93%
EPS 3Y-9.55%
EPS 5Y14.26%
EPS Q2Q%-11.76%
EPS Next Y0.16%
EPS Next 2Y25.35%
EPS Next 3Y27.4%
EPS Next 5YN/A
Revenue 1Y (TTM)19.05%
Revenue growth 3Y2.55%
Revenue growth 5Y11.49%
Sales Q2Q%4.18%
Revenue Next Year7.67%
Revenue Next 2Y8.71%
Revenue Next 3Y9.49%
Revenue Next 5YN/A
EBIT growth 1Y12.9%
EBIT growth 3Y-17.23%
EBIT growth 5Y13.76%
EBIT Next Year35.98%
EBIT Next 3Y39.22%
EBIT Next 5YN/A
FCF growth 1Y194.87%
FCF growth 3Y32.57%
FCF growth 5Y58.74%
OCF growth 1Y102.79%
OCF growth 3Y15.59%
OCF growth 5Y28.04%