ENERGY RECOVERY INC (ERII) Stock Fundamental Analysis
NASDAQ:ERII - Nasdaq - US29270J1007 - Common Stock - Currency: USD
ERII gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 128 industry peers in the Machinery industry. While ERII has a great health rating, its profitability is only average at the moment. While showing a medium growth rate, ERII is valued expensive at the moment.
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.
In the past 5 years ERII always reported a positive cash flow from operatings.
1.2 Ratios
ERII has a Return On Assets of 9.51%. This is in the better half of the industry: ERII outperforms 77.95% of its industry peers.
With a Return On Equity value of 10.82%, ERII perfoms like the industry average, outperforming 59.84% of the companies in the same industry.
ERII has a Return On Invested Capital (8.06%) which is in line with its industry peers.
ERII had an Average Return On Invested Capital over the past 3 years of 8.12%. This is below the industry average of 10.71%.
| 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
Looking at the Profit Margin, with a value of 15.21%, ERII belongs to the top of the industry, outperforming 88.98% of the companies in the same industry.
In the last couple of years the Profit Margin of ERII has grown nicely.
ERII's Operating Margin of 14.98% is fine compared to the rest of the industry. ERII outperforms 69.29% of its industry peers.
In the last couple of years the Operating Margin of ERII has grown nicely.
ERII has a better Gross Margin (66.88%) than 98.43% of its industry peers.
In the last couple of years the Gross Margin of ERII has declined.
| 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
ERII has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it 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.
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 19.26. This indicates that ERII is financially healthy and has little risk of bankruptcy at the moment.
ERII has a Altman-Z score of 19.26. This is amongst the best in the industry. ERII outperforms 98.43% 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 | 19.26 |
ROIC/WACC0.84
WACC9.65%
2.3 Liquidity
A Current Ratio of 8.39 indicates that ERII has no problem at all paying its short term obligations.
With an excellent Current ratio value of 8.39, ERII belongs to the best of the industry, outperforming 95.28% of the companies in the same industry.
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.
The Quick ratio of ERII (6.63) is better than 95.28% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 8.39 | ||
| Quick Ratio | 6.63 |
3. Growth
3.1 Past
The earnings per share for ERII have decreased by -5.77% in the last year.
Measured over the past years, ERII shows a very strong growth in Earnings Per Share. The EPS has been growing by 27.65% on average per year.
ERII shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 12.93%.
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)-5.77%
EPS 3Y34.63%
EPS 5Y27.65%
EPS Q2Q%-53.33%
Revenue 1Y (TTM)12.93%
Revenue growth 3Y11.74%
Revenue growth 5Y10.77%
Sales Q2Q%-27.3%
3.2 Future
The Earnings Per Share is expected to grow by 12.43% on average over the next years. This is quite good.
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 2Y9.72%
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
Based on the Price/Earnings ratio of 28.96, the valuation of ERII can be described as expensive.
The rest of the industry has a similar Price/Earnings ratio as ERII.
Compared to an average S&P500 Price/Earnings ratio of 26.48, ERII is valued at the same level.
With a Price/Forward Earnings ratio of 19.32, ERII is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ERII is on the same level as its industry peers.
ERII's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 34.04.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.96 | ||
| Fwd PE | 19.32 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ERII is valued a bit more expensive than 70.08% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ERII is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 32.17 | ||
| EV/EBITDA | 23.98 |
4.3 Compensation for Growth
ERII has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as ERII's earnings are expected to grow with 12.43% in the coming years.
PEG (NY)N/A
PEG (5Y)1.05
EPS Next 2Y9.72%
EPS Next 3Y12.43%
5. Dividend
5.1 Amount
ERII does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
14.19
-0.46 (-3.14%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners89.09%
Inst Owner Change-1.46%
Ins Owners2.75%
Ins Owner Change-1.99%
Market Cap773.36M
Analysts82.22
Price Target15.94 (12.33%)
Short Float %1.52%
Short Ratio1.88
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)7.76%
PT rev (3m)-20.55%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-94.12%
EPS NY rev (1m)0%
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)-2.36%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.96 | ||
| Fwd PE | 19.32 | ||
| P/S | 5.49 | ||
| P/FCF | 32.17 | ||
| P/OCF | 31.31 | ||
| P/B | 3.9 | ||
| P/tB | 4.17 | ||
| EV/EBITDA | 23.98 |
EPS(TTM)0.49
EY3.45%
EPS(NY)0.73
Fwd EY5.18%
FCF(TTM)0.44
FCFY3.11%
OCF(TTM)0.45
OCFY3.19%
SpS2.59
BVpS3.64
TBVpS3.4
PEG (NY)N/A
PEG (5Y)1.05
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 | 10.7% | ||
| Cap/Sales | 0.47% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 90.39% | ||
| Profit Quality | 112.17% | ||
| Current Ratio | 8.39 | ||
| Quick Ratio | 6.63 | ||
| Altman-Z | 19.26 |
F-Score7
WACC9.65%
ROIC/WACC0.84
Cap/Depr(3y)44.7%
Cap/Depr(5y)74.94%
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)-5.77%
EPS 3Y34.63%
EPS 5Y27.65%
EPS Q2Q%-53.33%
EPS Next Y-9.7%
EPS Next 2Y9.72%
EPS Next 3Y12.43%
EPS Next 5YN/A
Revenue 1Y (TTM)12.93%
Revenue growth 3Y11.74%
Revenue growth 5Y10.77%
Sales Q2Q%-27.3%
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 Year122.29%
EBIT Next 3Y51.89%
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%