Energy Recovery, Inc. (ERII) Stock Analysis

Why this analysis is different

• A sector-relative MoonshotScore — five pillars (business quality, financial safety, valuation, growth durability, momentum) re-ranked nightly against the full universe of US-listed common stocks.
• An AI Council read across up to eight perspectives — value, macro, quantitative, and momentum lenses — that shows where they disagree instead of averaging the tension away.
• Figures come straight from FMP and Yahoo Finance filings data. The AI writes the narrative around the numbers — it never edits the numbers.

Energy Recovery, Inc. (ERII) Industrial Operations Profile

Energy Recovery, Inc. specializes in energy recovery devices and high-pressure pumps for desalination and industrial wastewater treatment. With a focus on reducing energy consumption and operating costs, the company serves engineering, procurement, and construction firms globally, positioning itself as a key player in sustainable water solutions.

What Is the Investment Thesis for ERII?

The company's proprietary energy recovery technology, particularly the PX Pressure Exchanger, offers significant cost savings for desalination plants, making it an attractive solution for water-scarce regions. With a gross margin of 64.3% and a P/E ratio of 24.82, the company demonstrates strong profitability and growth potential. Key catalysts include expanding into new geographic markets and applications, such as natural gas processing. However, potential risks include competition from alternative technologies and fluctuations in capital spending by desalination plant operators. The company's strong market position and innovative technology support a positive long-term outlook.

Based on FMP financials and quantitative analysis

ERII Key Highlights

Market Cap of $375M reflects the company's current valuation in the industrial sector.

• P/E Ratio of 24.82 indicates investor expectations for future earnings growth.
• Profit Margin of 15.1% demonstrates efficient operations and strong pricing power.
• Gross Margin of 64.3% highlights the company's ability to control production costs and maintain profitability.
• Beta of 1.08 suggests the stock's volatility is similar to the overall market.

Who Are ERII's Competitors?

ERII is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance This table mixes two scoring engines — compare a number only with others carrying the same tag.

What Are ERII's Key Strengths?

Proprietary energy recovery technology.

• Strong market position in desalination.
• High gross margin.
• Experienced management team.

What Are ERII's Weaknesses?

Reliance on desalination market.

• Limited product diversification.
• Exposure to project delays and cancellations.
• Geographic concentration of revenue.

What Could Drive ERII Stock Higher?

Potential new contracts for desalination projects in water-scarce regions.

• Expansion into the industrial wastewater treatment market.
• Development of new applications for energy recovery technology in other industries.

What Are the Key Risks for ERII?

Inconsistent delivery — missed Wall Street EPS estimates in 4 of the last 8 reported quarters.

• Competition from alternative desalination technologies.
• Fluctuations in capital spending by desalination plant operators.
• Changes in environmental regulations.
• Reliance on a limited number of large projects.

What Are the Growth Opportunities for ERII?

• Growth opportunity 1: Expanding into the industrial wastewater treatment market presents a significant growth opportunity for Energy Recovery. The increasing stringency of environmental regulations and the rising cost of water disposal are driving demand for efficient wastewater treatment solutions. The company's existing energy recovery technology can be adapted to reduce energy consumption in wastewater treatment plants, offering a compelling value proposition. The global industrial wastewater treatment market is estimated to be worth billions of dollars, providing a substantial addressable market for Energy Recovery. Timeline: Ongoing.
• Growth opportunity 2: Penetrating new geographic markets, particularly in Asia and the Middle East, offers substantial growth potential. These regions are experiencing rapid population growth and increasing water scarcity, driving demand for desalination and wastewater treatment solutions. Energy Recovery can leverage its existing technology and partnerships to establish a presence in these markets and capitalize on the growing demand. Timeline: Ongoing.
• Growth opportunity 3: Developing new applications for its energy recovery technology in other industries, such as natural gas processing and refrigeration, represents a significant growth opportunity. The company's technology can be adapted to reduce energy consumption and improve efficiency in these industries, offering a compelling value proposition. The market for energy recovery solutions in these industries is estimated to be substantial, providing a significant growth opportunity for Energy Recovery. Timeline: Ongoing.
• Growth opportunity 4: Increasing sales of aftermarket products and services, such as spare parts, repair, and maintenance, provides a recurring revenue stream and enhances customer relationships. The company can leverage its existing customer base and distribution network to increase sales of these products and services. This recurring revenue stream can help to stabilize the company's financial performance and reduce its reliance on new project orders. Timeline: Ongoing.
• Growth opportunity 5: Collaborating with strategic partners, such as EPC firms and OEMs, can accelerate market penetration and expand the company's reach. By partnering with these companies, Energy Recovery can leverage their existing relationships and distribution networks to reach a wider customer base. These partnerships can also provide access to new technologies and expertise, enhancing the company's competitive advantage. Timeline: Ongoing.

What Are ERII's Competitive Advantages?

• Patented PX Pressure Exchanger technology provides a competitive advantage in energy efficiency.
• Established relationships with EPC firms and OEMs create barriers to entry.
• Strong brand reputation for reliability and performance.
• Recurring revenue from aftermarket products and services.
• Technical expertise and engineering capabilities.

What Does ERII Do?

Energy Recovery, Inc., founded in 1992 and headquartered in San Leandro, California, is a global provider of energy recovery solutions for industrial fluid-flow markets. The company primarily focuses on seawater reverse osmosis (SWRO) desalination and industrial wastewater treatment, offering a suite of products designed to reduce energy consumption and lower operational costs. Its product portfolio includes energy recovery devices like the PX Pressure Exchanger, high-pressure feed and recirculation pumps, hydraulic turbochargers, and boosters. These products are sold under brand names such as ERI, Ultra PX, VorTeq, IsoBoost, AT, and AquaBold. Energy Recovery serves a diverse customer base, including large engineering, procurement, and construction (EPC) firms, end-users, industry consultants, original equipment manufacturers (OEMs), and aftermarket customers. The company operates through two segments: Water and Emerging Technologies. The Water segment focuses on desalination and wastewater treatment, while the Emerging Technologies segment explores opportunities to apply its technology in other industries, such as natural gas processing and refrigeration systems using carbon dioxide. Energy Recovery's solutions aim to improve the sustainability and efficiency of industrial processes worldwide.

What Products and Services Does ERII Offer?

• Designs and manufactures energy recovery devices for desalination plants.
• Provides high-pressure feed and recirculation pumps.
• Offers hydraulic turbochargers and boosters.
• Sells spare parts and provides repair services.
• Offers solutions for industrial wastewater treatment.
• Develops technology to reduce energy consumption in natural gas processing.
• Provides solutions for refrigeration systems using carbon dioxide.

How Does ERII Make Money?

• Sells energy recovery devices and pumps to desalination plants and industrial facilities.
• Generates revenue from aftermarket products and services, such as spare parts and repairs.
• Partners with EPC firms and OEMs to distribute its products.
• Provides engineering and consulting services to customers.

What Industry Does ERII Operate In?

Energy Recovery operates within the industrial pollution and treatment controls sector, which is experiencing growth due to increasing environmental regulations and the rising demand for clean water. The global desalination market is projected to grow significantly, driven by water scarcity and population growth. Energy Recovery competes with companies offering alternative desalination technologies and energy recovery solutions. The company's competitive advantage lies in its patented PX Pressure Exchanger technology, which offers superior energy efficiency compared to traditional methods. The company is well-positioned to capitalize on the growing demand for sustainable water solutions.

Who Are ERII's Key Customers?

• Large engineering, procurement, and construction (EPC) firms.
• End-users of desalination and wastewater treatment plants.
• Industry consultants.
• Original equipment manufacturers (OEMs).
• Aftermarket customers requiring spare parts and services.

Energy Recovery, Inc. Financial Trajectory

Energy Recovery, Inc. (ERII) reported $12.0M in revenue for Q2 FY2026, reflecting 23.6% growth compared to the prior quarter. The company recorded a net loss of $3.2M, with diluted EPS of $-0.06. Quarter-over-quarter revenue has been mixed, typical for a small-cap company operating in Industrials. Across the four most recent quarters, ERII averaged $0.07 in diluted EPS.

Company Profile

Energy Recovery, Inc. operates in the Industrial - Pollution & Treatment Controls industry within the Industrials sector. It is headquartered in San Leandro, US. The company is led by CEO Alexander J. Buehler. ERII has traded publicly since 2008.

How Energy Recovery, Inc. Is Valued

Energy Recovery, Inc. carries a market capitalization of $375M, placing it in the small-cap category. Analyst price targets span from $8.00 to $12.00, with a consensus of $10.00. At the current price of $7.27, that implies approximately 38% upside potential. Relative to its peer group, ERII's quantitative score of 85/100 is above the peer average of 42/100.

Return on equity for Energy Recovery, Inc. stands at 10.9%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 9.9%, showing how much profit it generates from its asset base. ERII trades at a trailing price-to-earnings ratio of 24.82, below the Industrials sector average of ~28.00x. Its free cash flow yield is 5.8%, a gauge of the cash the business throws off relative to its market value. A current ratio of 9.28 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 4.3%, the inverse of the P/E and a quick read on earnings relative to price.

Energy Recovery, Inc.'s Piotroski F-Score is 6/9, a 9-point checklist of profitability, leverage and efficiency — a middling fundamental profile. Its Altman Z-Score of 11.40 places it in the safe zone, indicating low near-term bankruptcy risk.

Energy Recovery, Inc. has missed Wall Street's EPS estimate in 4 of its last 8 reported quarters — a mixed record worth weighing. Reported results have landed about 133.4% below estimates on average.

Over the past six months, Energy Recovery, Inc. insiders filed 17 SEC Form 4 transactions — 8 sales and 9 purchases. On net that is roughly 52K shares disposed (about $822K), a signal worth weighing alongside the fundamentals.

ERII Financials

ERII Latest News

ERII Analyst Consensus

ERII MoonshotScore

Energy Recovery, Inc. Industrials Stock: Key Questions Answered

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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