📊 ERII Key Takeaways
Is ERII a Good Investment? Thesis Analysis
Energy Recovery demonstrates solid operational efficiency with strong profitability margins (65.1% gross, 17.0% net) and fortress-like balance sheet strength (10.44x current ratio, zero debt). However, revenue contraction of 6.9% YoY and modest net income growth of -0.4% YoY suggest the company faces headwinds in top-line growth that offset its operational excellence, warranting a cautious stance pending evidence of revenue stabilization.
Why Buy ERII? Key Strengths
- Exceptional balance sheet health with zero long-term debt, $48.1M cash, and 10.44x current ratio providing significant financial flexibility
- High profitability margins across all levels (65.1% gross margin, 17.7% operating margin, 17.0% net margin) indicating strong pricing power and operational efficiency
- Positive free cash flow generation of $17.4M (12.9% FCF margin) with low capital intensity (CapEx only $1.3M), supporting sustainable distributions
- Stable return on equity of 11.1% and ROA of 9.9% demonstrate consistent capital deployment efficiency
ERII Investment Risks to Consider
- Revenue declined 6.9% year-over-year, indicating potential market share loss or weakening demand in core markets requiring investigation
- Net income essentially flat (-0.4% YoY) despite cost controls suggests limited operating leverage and difficulty growing earnings
- High insider trading activity (18 Form 4 filings in 90 days) warrants monitoring for potential concerns or opportunistic timing
Key Metrics to Watch
- Revenue trajectory in next two quarters - need to confirm whether YoY decline is stabilizing or accelerating
- Operating margin sustainability - monitor if declining revenue threatens fixed cost absorption
- Free cash flow conversion and cash balance adequacy - ensure operational performance translates to cash generation
ERII Financial Metrics
💡 AI Analyst Insight
Strong liquidity with a 10.44x current ratio provides a solid financial cushion.
ERII Profitability Ratios
ERII vs Industrial Sector
How Energy Recovery, Inc. compares to Industrial sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is ERII Overvalued or Undervalued?
Based on fundamental analysis, Energy Recovery, Inc. appears fundamentally strong 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.
ERII Balance Sheet & Liquidity
ERII 5-Year Financial Trend & Growth Analysis
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 Growth Metrics (YoY)
ERII Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| 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 |
| Q2 2023 | $20.3M | -$1.7M | $-0.03 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
ERII Capital Allocation
ERII SEC 10-K & 10-Q Filing Analysis
Access official SEC EDGAR filings for Energy Recovery, Inc. (CIK: 0001421517)
📋 Recent SEC Filings
| Date | Form | Document | Action |
|---|---|---|---|
| Mar 11, 2026 | 4 | xslF345X05/wk-form4_1773261205.xml | View → |
| Mar 9, 2026 | 4 | xslF345X05/wk-form4_1773092014.xml | View → |
| Mar 6, 2026 | 4 | xslF345X05/wk-form4_1772840973.xml | View → |
| Mar 6, 2026 | 4 | xslF345X05/wk-form4_1772840909.xml | View → |
| Mar 4, 2026 | 4 | xslF345X05/wk-form4_1772661438.xml | View → |
❓ Frequently Asked Questions about ERII
What is the AI rating for ERII?
Energy Recovery, Inc. (ERII) has an AI rating of HOLD with 62% confidence, based on fundamental analysis of SEC EDGAR filings.
What are ERII's key strengths?
Claude: Exceptional balance sheet health with zero long-term debt, $48.1M cash, and 10.44x current ratio providing significant financial flexibility. High profitability margins across all levels (65.1% gross margin, 17.7% operating margin, 17.0% net margin) indicating strong pricing power and operational efficiency.
What are the risks of investing in ERII?
Claude: Revenue declined 6.9% year-over-year, indicating potential market share loss or weakening demand in core markets requiring investigation. Net income essentially flat (-0.4% YoY) despite cost controls suggests limited operating leverage and difficulty growing earnings.
What is ERII's revenue and growth?
Energy Recovery, Inc. reported revenue of $135.0M.
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 $0.42.
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 March 2026, Energy Recovery, Inc. has a HOLD rating with 62% 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 11.1% (sector avg: 15%), net margin of 17.0% (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 HOLD rating for 2026. Revenue is data pending, with profitability above sector average. Always conduct your own research.
What is ERII's free cash flow?
Energy Recovery, Inc.'s operating cash flow is $18.8M, with capital expenditures of $1.3M. FCF margin is 12.9%.
How does ERII compare to other Industrial stocks?
Vs Industrial sector averages: Net margin 17.0% (avg: 10%), ROE 11.1% (avg: 15%), current ratio 10.44 (avg: 1.8).