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 127 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
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.
Each year in the past 5 years ERII had a positive operating cash flow.
1.2 Ratios
ERII has a better Return On Assets (9.51%) than 77.95% of its industry peers.
The Return On Equity of ERII (10.82%) is comparable to the rest of the industry.
The Return On Invested Capital of ERII (8.06%) is comparable to the rest of the industry.
ERII had an Average Return On Invested Capital over the past 3 years of 8.12%. This is below the industry average of 10.78%.
| 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
With an excellent Profit Margin value of 15.21%, ERII belongs to the best of the industry, outperforming 87.40% of the companies in the same industry.
ERII's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 14.98%, ERII is in the better half of the industry, outperforming 70.08% of the companies in the same industry.
ERII's Operating Margin has improved in the last couple of years.
The Gross Margin of ERII (66.88%) is better 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
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.
ERII has less shares outstanding than it did 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 18.03 indicates that ERII is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 18.03, ERII belongs to the top of the industry, outperforming 96.85% of the companies in the same industry.
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 | 18.03 |
ROIC/WACC0.81
WACC9.91%
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.
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.
ERII has a better Quick ratio (6.63) than 95.28% 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.
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)10.93%
Revenue growth 3Y11.74%
Revenue growth 5Y10.77%
Sales Q2Q%-33.29%
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 23.09, the valuation of ERII can be described as rather expensive.
The rest of the industry has a similar Price/Earnings ratio as ERII.
When comparing the Price/Earnings ratio of ERII to the average of the S&P500 Index (27.41), we can say ERII is valued inline with the index average.
The Price/Forward Earnings ratio is 17.92, which indicates a rather expensive current valuation of ERII.
64.57% of the companies in the same industry are more expensive than ERII, based on the Price/Forward Earnings ratio.
ERII's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 35.19.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.09 | ||
| Fwd PE | 17.92 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ERII is valued a bit more expensive than 68.50% 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 | 29.84 | ||
| EV/EBITDA | 23.88 |
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 12.43% in the coming years.
PEG (NY)N/A
PEG (5Y)0.84
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 |
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)0%
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 | 17.92 | ||
| P/S | 5.09 | ||
| P/FCF | 29.84 | ||
| P/OCF | 29.03 | ||
| P/B | 3.62 | ||
| P/tB | 3.87 | ||
| EV/EBITDA | 23.88 |
EPS(TTM)0.57
EY4.33%
EPS(NY)0.73
Fwd EY5.58%
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 | 18.03 |
F-Score7
WACC9.91%
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 2Y9.72%
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%