📊 ERII Key Takeaways
Is Energy Recovery, Inc. (ERII) a Good Investment?
Energy Recovery is deeply unprofitable with a severe operating margin of -153% and declining 6.9% YoY revenue, indicating operational distress. While the balance sheet is fortress-like with $184.3M equity, zero debt, and $50.1M cash, the company continues to burn through profitability despite positive operating cash flow driven by non-cash charges. The strong cash position provides runway but cannot offset the fundamental lack of operational viability.
Energy Recovery shows a high-quality fundamental profile with strong gross margins, solid operating profitability, positive free cash flow, and an exceptionally clean balance sheet with no long-term debt. However, the latest period shows revenue contraction and essentially flat net income, which suggests the business remains financially strong but currently lacks clear top-line momentum.
Why Buy Energy Recovery, Inc. Stock? ERII Key Strengths
- Fortress balance sheet with $184.3M equity and only $24.7M liabilities
- Exceptional liquidity with 9.28x current ratio and zero debt
- Positive free cash flow of $20.2M despite operational losses, providing near-term survival
- $50.1M cash reserves offer substantial runway for turnaround
- Very strong balance sheet with $48.08M in cash, no long-term debt, and high liquidity ratios
- High profitability profile, including 65.1% gross margin and 17.7% operating margin
- Positive free cash flow generation with low capital intensity, supporting financial flexibility
ERII Stock Risks: Energy Recovery, Inc. Investment Risks
- Revenue declining 6.9% YoY with only $9.7M in sales, indicating shrinking market demand
- Severe unprofitability: -$14.9M operating income and -$12.3M net income on minimal revenue base
- Massive operating margin of -153% and net margin of -126% showing business model failure at core level
- Negative ROE (-6.6%) and ROA (-5.9%) destroying shareholder value; unclear path to profitability
- Positive operating cash flow masking deterioration: likely driven by large non-cash charges rather than operational improvement
- Revenue declined 6.9% year over year, raising concern about demand consistency and growth durability
- Net income was nearly flat despite higher EPS, indicating limited underlying earnings expansion
- Operating cash flow trails net income, which could signal weaker cash conversion if it persists
Key Metrics to Watch
- Revenue trend reversal and YoY growth rate normalization
- Operating margin recovery toward breakeven, then profitability
- Cash burn rate and months of runway remaining at current burn
- Operating cash flow sustainability and reconciliation with GAAP losses
- Revenue growth and order momentum across core end markets
- Operating cash flow and free cash flow conversion relative to net income
Energy Recovery, Inc. (ERII) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The 208.4% free cash flow margin provides substantial flexibility for dividends, buybacks, and strategic investments. Strong liquidity with a 9.28x current ratio provides a solid financial cushion.
ERII Profit Margin, ROE & Profitability Analysis
ERII vs Industrial Sector: How Energy Recovery, Inc. Compares
How Energy Recovery, Inc. compares to Industrial sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Energy Recovery, Inc. Stock Overvalued? ERII Valuation Analysis 2026
Based on fundamental analysis, Energy Recovery, Inc. has mixed fundamental signals relative to the Industrial sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Energy Recovery, Inc. Balance Sheet: ERII Debt, Cash & Liquidity
ERII Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Energy Recovery, Inc.'s revenue has grown significantly by 22% over the 5-year period, indicating strong business expansion. The most recent EPS of $0.37 reflects profitable operations.
ERII Revenue Growth, EPS Growth & YoY Performance
ERII Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $8.1M | -$9.9M | $-0.18 |
| Q3 2025 | $32.0M | -$421.0K | $-0.01 |
| Q2 2025 | $27.2M | -$642.0K | $-0.01 |
| Q1 2025 | $8.1M | -$8.3M | $-0.14 |
| Q3 2024 | $37.0M | -$421.0K | $-0.01 |
| Q2 2024 | $20.7M | -$642.0K | $-0.01 |
| Q1 2024 | $12.1M | -$6.3M | $-0.11 |
| Q3 2023 | $30.5M | $1.7M | $0.03 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Energy Recovery, Inc. Dividends, Buybacks & Capital Allocation
ERII SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Energy Recovery, Inc. (CIK: 0001421517)
📋 Recent SEC Filings
❓ Frequently Asked Questions about ERII
What is the AI rating for ERII?
Energy Recovery, Inc. (ERII) has a Combined AI Rating of SELL from Claude (SELL) and ChatGPT (HOLD) with 72% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are ERII's key strengths?
Claude: Fortress balance sheet with $184.3M equity and only $24.7M liabilities. Exceptional liquidity with 9.28x current ratio and zero debt. ChatGPT: Very strong balance sheet with $48.08M in cash, no long-term debt, and high liquidity ratios. High profitability profile, including 65.1% gross margin and 17.7% operating margin.
What are the risks of investing in ERII?
Claude: Revenue declining 6.9% YoY with only $9.7M in sales, indicating shrinking market demand. Severe unprofitability: -$14.9M operating income and -$12.3M net income on minimal revenue base. ChatGPT: Revenue declined 6.9% year over year, raising concern about demand consistency and growth durability. Net income was nearly flat despite higher EPS, indicating limited underlying earnings expansion.
What is ERII's revenue and growth?
Energy Recovery, Inc. reported revenue of $9.7M.
Does ERII pay dividends?
Energy Recovery, Inc. does not currently pay dividends.
Where can I find ERII SEC filings?
Official SEC filings for Energy Recovery, Inc. (CIK: 0001421517) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is ERII's EPS?
Energy Recovery, Inc. has a diluted EPS of $-0.23.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined rating reflects both perspectives for balanced insights.
Is ERII a good stock to buy right now?
Based on our AI fundamental analysis in May 2026, Energy Recovery, Inc. has a SELL rating with 72% confidence. Review the strengths and risks sections above before making a decision. This is not investment advice.
Is ERII stock overvalued or undervalued?
Valuation metrics for ERII: ROE of -6.6% (sector avg: 15%), net margin of -126.2% (sector avg: 10%). Compare these metrics with sector averages to assess valuation.
Should I buy ERII stock in 2026?
Our dual AI analysis gives Energy Recovery, Inc. a combined SELL rating for 2026. Revenue is data pending, with profitability at or below sector average. Always conduct your own research.
What is ERII's free cash flow?
Energy Recovery, Inc.'s operating cash flow is $21.0M, with capital expenditures of $814.0K. FCF margin is 208.4%.
How does ERII compare to other Industrial stocks?
Vs Industrial sector averages: Net margin -126.2% (avg: 10%), ROE -6.6% (avg: 15%), current ratio 9.28 (avg: 1.8).