Start here if you're new
what it is
Energy Recovery sells hardware that cuts the power bill for desalination plants and some industrial fluid systems.
how it gets paid
Last year Energy Recovery made $135M in revenue. Pressure exchanger devices was the main engine at $81M, or 60% of sales.
why growth slowed
Revenue fell 6.9% last year. EDGAR-based data shows revenue jumped 113% vs. prior year to $68 million.
what just happened
The quarter looked strong on sales, but the only number that mattered was -$0.07 EPS.
At a glance
B+ balance sheet — decent shape, but not bulletproof
45/100 earnings predictability — expect surprises
44.0x trailing p/e — you're paying up for this one
11.0% return on capital — nothing to write home about
$0.40 fy2024 eps est
xvary composite: 51/100 — below average
What they do
Energy Recovery sells hardware that cuts the power bill for desalination plants and some industrial fluid systems.
Its Pressure Exchanger devices sit inside seawater desalination systems, where energy savings decide who wins the bid. One web-based industry estimate puts PX market share near 70%, versus everyone else fighting for the remaining 30%. If your plant already runs around this hardware, switching vendors risks downtime and lost efficiency.
How they make money
$135M
annual revenue · their business grew -6.9% last year
Pressure exchanger devices
$81M
flat
High-pressure pumps
$20M
up
Turbochargers and boosters
$11M
dn
Spare parts
$14M
up
Repair and field services
$9M
up
The products that matter
recovers pressure inside desalination systems
Pressure Exchanger (PX)
70% share in core niche
It holds 70% market share in seawater reverse osmosis energy recovery and helped the company keep a 63.1% gross margin even as revenue slipped to $135M.
core moat
higher-flow next launch
PX Q650
launch planned H2 2026
Management plans to launch it in H2 2026, and it matters because ERII is guiding the whole business to about $95M of revenue this year. New product traction would help prove 2026 is a pause, not a trend.
catalyst watch
applies PX tech outside desalination
Industrial Wastewater
smaller than the core business
The pitch is simple: reuse the same pressure-exchange technology in another market. The data here is still thin, so for now you should view it as optional upside next to a $135M company still dominated by desalination timing.
unproven upside
Key numbers
44.0x
trailing p/e
P/E → how many years of current earnings you're paying for → so what: you are paying growth-stock prices for a company with declining annual revenue.
$135M
annual revenue
Revenue → total sales → so what: this is still a very small company, which makes every delayed project show up loudly.
18.1%
operating margin
Operating margin → profit left after running the business → so what: the product economics are good when volume shows up.
11.0%
return on capital
Return on capital → profit produced from the money tied up in the business → so what: solid, but not high enough to justify any price.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 25 / 100
- long-term debt $8M (1% of capital)
B+ — functional but not a standout on the balance sheet.
Total return vs. market
Return history isn't available for ERII right now.
source: institutional data · return history unavailable
What just happened
missed estimates
The quarter looked strong on sales, but the only number that mattered was -$0.07 EPS.
EDGAR-based data shows revenue jumped 113% vs. prior year to $68 million, but EPS fell to negative $0.07. Quiet part loud: one big quarter does not fix a lumpy business.
$68M
revenue
$0.07
eps
63.1%
gross margin
the number that mattered
Gross margin hit 63.1%, which says the hardware is attractive; the problem is getting enough steady volume for that margin to matter.
source: company earnings report, 2026
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What could go wrong
Your #1 risk is delayed desalination projects turning a one-year reset into a multi-year slowdown.
high
project timing risk is the whole story right now
Management guided 2026 revenue to about $95M after reporting $135M last year. If those delayed desalination projects slip again, the market stops treating this as timing noise and starts treating it as weaker demand.
Management guided 2026 revenue to about $95M after reporting $135M last year. If those delayed desalination projects slip again, the market stops treating this as timing noise and starts treating it as weaker demand.
med
the CO2 exit helps costs but hurts confidence
Exiting the CO2 refrigeration business and targeting about $7M of annual savings is financially sensible. It also leaves a credibility scar, because the diversification story did not survive contact with reality.
Exiting the CO2 refrigeration business and targeting about $7M of annual savings is financially sensible. It also leaves a credibility scar, because the diversification story did not survive contact with reality.
med
customer concentration creates lumpy revenue
ERII sells into a market shaped by a small number of large engineering firms and regional water authorities. That can support good margins, but it also means a few delayed decisions can move a lot of revenue.
ERII sells into a market shaped by a small number of large engineering firms and regional water authorities. That can support good margins, but it also means a few delayed decisions can move a lot of revenue.
med
the multiple leaves little room for another miss
At 44.0x trailing earnings, you are not buying a broken industrial at a distressed price. You are buying a rebound thesis. If the rebound slips, the valuation usually slips with it.
At 44.0x trailing earnings, you are not buying a broken industrial at a distressed price. You are buying a rebound thesis. If the rebound slips, the valuation usually slips with it.
A move from $135M of revenue last year to about $95M this year puts roughly 30% of the top line in play, while the stock still trades at 44.0x trailing earnings.
source: institutional data · regulatory filings · risk analysis
Pay attention to
the metric
does revenue stay near $95M, or does it start climbing back
This is the cleanest scoreboard on the entire page. If 2026 stays stuck near the guided $95M, the recovery story gets harder to defend at 44x earnings.
calendar
PX Q650 launch in H2 2026
Management says the higher-flow PX Q650 arrives in H2 2026. You want evidence of customer uptake, not just launch language.
risk
large-project timing in desalination
The next quarter matters less for the headline beat and more for whether previously delayed desalination projects are actually moving. That is the bottleneck.
trend
analyst target cuts after the reset
The average target moved to $17.07 from $19.05. More cuts would tell you the street thinks the reset is getting longer, not shorter.
Analyst rankings
earnings predictability
45 / 100
In human-speak, analysts do not see this as a smooth quarter-to-quarter story. Big projects land when they land.
risk rank
3
Middle-of-the-pack safety. The balance sheet helps, but the revenue pattern still carries real volatility.
source: institutional data
Institutional activity
institutional ownership data for ERII is being compiled.
source: institutional data
Price targets
3-5 year target range
n/a
n/a
$15
current price
n/a
target midpoint · n/a from current
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