ENERGY RECOVERY INC (ERII) Stock Fundamental Analysis
NASDAQ:ERII - Nasdaq - US29270J1007 - Common Stock - Currency: USD
Overall ERII gets a fundamental rating of 7 out of 10. We evaluated ERII against 128 industry peers in the Machinery industry. Both the health and profitability get an excellent rating, making ERII a very profitable company, without any liquidiy or solvency issues. ERII is valued quite expensive, but it does show an excellent growth. This makes ERII very considerable for growth and quality 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.
ERII had positive earnings in each of the past 5 years.
ERII had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 9.49%, ERII belongs to the best of the industry, outperforming 80.47% of the companies in the same industry.
ERII has a Return On Equity (10.98%) which is in line with its industry peers.
Looking at the Return On Invested Capital, with a value of 7.99%, ERII is in line with its industry, outperforming 58.59% 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 10.30%.
| 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
ERII has a Profit Margin of 15.90%. This is amongst the best in the industry. ERII outperforms 90.63% of its industry peers.
In the last couple of years the Profit Margin of ERII has grown nicely.
With a decent Operating Margin value of 15.32%, ERII is doing good in the industry, outperforming 72.66% of the companies in the same industry.
ERII's Operating Margin has improved in the last couple of years.
ERII has a better Gross Margin (66.87%) than 99.22% of its industry peers.
ERII's Gross Margin has declined in the last couple of years.
| 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
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
ERII has less shares outstanding than it did 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
An Altman-Z score of 14.60 indicates that ERII is not in any danger for bankruptcy at the moment.
The Altman-Z score of ERII (14.60) is better than 96.88% of its industry peers.
ERII has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 14.6 |
ROIC/WACC0.8
WACC9.98%
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.
With an excellent Current ratio value of 7.41, ERII belongs to the best of the industry, outperforming 95.31% of the companies in the same industry.
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 67.65%, which is quite impressive.
ERII shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 27.65% 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)67.65%
EPS 3Y34.63%
EPS 5Y27.65%
EPS Q2Q%-28.57%
Revenue 1Y (TTM)12.93%
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 13.74% on average per year.
The Revenue is expected to grow by 12.79% on average over the next years. This is quite good.
EPS Next Y-2.46%
EPS Next 2Y9.72%
EPS Next 3Y13.74%
EPS Next 5YN/A
Revenue Next Year4.81%
Revenue Next 2Y7.95%
Revenue Next 3Y12.79%
Revenue Next 5YN/A
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past 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
ERII is valuated rather expensively with a Price/Earnings ratio of 21.72.
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 26.20.
With a Price/Forward Earnings ratio of 16.86, ERII is valued correctly.
Based on the Price/Forward Earnings ratio, ERII is valued a bit cheaper than the industry average as 60.16% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of ERII to the average of the S&P500 Index (22.13), we can say ERII is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.72 | ||
| Fwd PE | 16.86 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ERII is valued a bit more expensive than the industry average as 65.63% of the companies are valued more cheaply.
Based on the Price/Free Cash Flow ratio, ERII is valued a bit more expensive than the industry average as 61.72% of the companies are valued more cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 35.1 | ||
| EV/EBITDA | 20.89 |
4.3 Compensation for Growth
The decent profitability rating of ERII may justify a higher PE ratio.
A more expensive valuation may be justified as ERII's earnings are expected to grow with 13.74% in the coming years.
PEG (NY)N/A
PEG (5Y)0.79
EPS Next 2Y9.72%
EPS Next 3Y13.74%
5. Dividend
5.1 Amount
ERII does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
12.38
0 (0%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners85.53%
Inst Owner Change1.26%
Ins Owners2.62%
Ins Owner Change-0.16%
Market Cap674.71M
Analysts80
Price Target20.06 (62.04%)
Short Float %1.75%
Short Ratio1.82
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)40.26%
Min EPS beat(2)17.13%
Max EPS beat(2)63.4%
EPS beat(4)3
Avg EPS beat(4)35.56%
Min EPS beat(4)-1.67%
Max EPS beat(4)63.4%
EPS beat(8)5
Avg EPS beat(8)21.63%
EPS beat(12)7
Avg EPS beat(12)27.1%
EPS beat(16)10
Avg EPS beat(16)58.01%
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)0%
PT rev (3m)1.72%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-137.5%
EPS NY rev (1m)-3.85%
EPS NY rev (3m)2.34%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-27.46%
Revenue NY rev (1m)-4.46%
Revenue NY rev (3m)-4.51%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.72 | ||
| Fwd PE | 16.86 | ||
| P/S | 4.65 | ||
| P/FCF | 35.1 | ||
| P/OCF | 32.88 | ||
| P/B | 3.21 | ||
| P/tB | 3.42 | ||
| EV/EBITDA | 20.89 |
EPS(TTM)0.57
EY4.6%
EPS(NY)0.73
Fwd EY5.93%
FCF(TTM)0.35
FCFY2.85%
OCF(TTM)0.38
OCFY3.04%
SpS2.66
BVpS3.85
TBVpS3.62
PEG (NY)N/A
PEG (5Y)0.79
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 | 14.6 |
F-Score6
WACC9.98%
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)67.65%
EPS 3Y34.63%
EPS 5Y27.65%
EPS Q2Q%-28.57%
EPS Next Y-2.46%
EPS Next 2Y9.72%
EPS Next 3Y13.74%
EPS Next 5YN/A
Revenue 1Y (TTM)12.93%
Revenue growth 3Y11.74%
Revenue growth 5Y10.77%
Sales Q2Q%-33.29%
Revenue Next Year4.81%
Revenue Next 2Y7.95%
Revenue Next 3Y12.79%
Revenue Next 5YN/A
EBIT growth 1Y16.54%
EBIT growth 3Y17.08%
EBIT growth 5Y16.38%
EBIT Next Year140.1%
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%