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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Energy Recovery, Inc. (XNAS:ERII) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
ERII
Name:
ENERGY RECOVERY, INC. (XNAS:ERII)
Sector:
- 3578.00K
Industry:
Pollution & Treatment Controls
CEO:
Mr. Yu Lang Mao
Total Employees:
222
Our Technological Advancement Rating
Our Rating:
-
-
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF ENERGY RECOVERY, INC.(ERII) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND POLLUTION & TREATMENT CONTROLS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
22.84
One Month Price Target:
$22.99
Six Month Price Target :
$23.75
Likely Price in One Year's Time:
Ticker:
$24.67
Likely Trading Range Today Under (Normal Volatility)
$22.77
Price Upper limit ($) :
$23.
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$21.48
This week:
$19.81
This month :
$16.78
Other Primary facts
Market Cap:
1.30B
Market Cap Classification:
Small Cap
Number of Shares
IPO Date:
55.79M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
14.44%
-16.%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$29.12
$26.17
$16.56
$19.51
Medium risk (<10%) entry points
Buy Call
Sell Call
$25.21
Buy Put:
Sell Put:
$24.58
$20.46
$21.10
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
ERII
Sharpe Ratio:
5.92%
Comparison:
ERII, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 0.00% lower than the industry
& ratio is 159.54% higher than the market/S&P 500 average
Average Returns/Yield of
ERII
Daily returns:
0.19%
Weekly returns:
0.93%
Monthly returns:
3.70%
Yearly returns:
44.42%
Comparison of returns:
Average annual returns/yield (last 3 years) is 0.00% below industry average
Classification:
ERII, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.05
Statistical test of Returns:
ERII has yielded a higher return than the market, the results are statistically significant
Volatility (measured by Standard Deviation)
Daily Volatility:
2.98%
Weekly Volatility:
6.66%
Monthly Volatility:
13.32%
Yearly Volatility:
46.15%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.69%
Volatility in last five trading days has been -76.99% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.93%
Weekly VaR:
-13.27%
Monthly VaR:
-26.53%
How Much Can the price of
ERII
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-21%
Worst case (decline):
-91.92%
This translates to price declining to:
$17.97
This translates to price declining to:
$1.85
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
ERII is a 87.28% riskier investment compared to the market/S&P 500 & is 60.44% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 0.00% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
ERII
Beta in relation to market/S&P 500--1.19
Expected beta in 1 year's time:
0.901
Expected beta in 3 year's time:
1.274
Unlevered (debt free) Beta:
1.106
Beta in relation to Nasdaq (XNAS):
0.593
Beta in relation to all global stocks::
0.778
Beta Comparison & Analysis
Beta of competitors/peers::
1.257
Beta is -5.26% lower than peers
Average Industry Beta:
1.191
Beta is 0.00% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
6.97%
Sustainable growth rate is 0.00% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.331
Alpha is 0.00% below industry average alpha yield
Alpha is 2108% higher than market/& is unsustainably high
Analysis of Cost of Capital of
ERII
Equity cost of capital:
0.113
Equity cost of capital is 0.00% below industry mean WACC
Unlevered (without debt) cost of capital:
10.50%
Before-tax cost of debt:
1.08%
After-tax cost of debt:
0.85%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
0.85%
WACC is 0.00% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$1.93
Revenue growth rate per share of (3Y):
7.04
FALSE
EPS:
$0.26
Expected Annual growth rate of EPS (3Y):
6.27%
Expected future EPS growth rate is 0.00% lower than the Pollution & Treatment Controls industry
Free cash flow (FCF) per share:
$0.07
-
-
Debt per share
$0.26
EBITDA per share
$0.40
Valuation Analysis Today of
ERII
P/E Ratio:
113.14
P/E Ratio of Competitors/Peers:
15.8
P/E ratio is 616.11% higher than main peers & is 49.71% higher than the industry
Stock price/value with industry average P/E ratio: $19.65
ERII is 16.24% overvalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
11.85
Price to sales ratio is 14.20% above the industry mean
P/B (Price to book value ratio):
7.04
Price to free cash flow: 331.31
-
Net income growth rate (3Y):
-39.11%
Net income growth rate is 0.00% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
8.08%
Net debt to equity ratio:
-15.72%
Debt to assets ratio:
6.90%
Net debt to assets ratio:
-13.43%
Debt-to-asset ratio is -55.04% below industry average
Ability to repay debt:
Interest coverage ratio:
128.73
-
Looking forward:
Debt growth rate:
-7.03%
Annual debt growth is 0% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.418
Statistical significance of correlation:
ERII has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.418
Stock price is 0.00% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.418
Correlation of price movement with Nasdaq (^IXIC):
0.004
Covariance of price movement with the market:
0.007
Kurtosis
5.135
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.655
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
ERII
Gross Profit Margin Ratio:
276%
Operating Profit Margin Ratio:
14.80%
Operating profit margin is 14.92% higher than the industry
Net Profit Margin Ratio:
276%
Effective Tax Rate:
5.09%
-
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
8.45%
Return on equity (ROE) is 21.20% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
7.22%
Return on assets (ROA) is 21.05% higher than the industry
Financial Leverage:
1.1x
Current Ratio:
8.7
Current ratio is -3.88% below industry average
Cash Conversion Cycle (days):
118.4
Cash conversion cycle is 1065.99% above industry average
The remaining useful life of property plant & equipment is: 2.9 years
Stock based compensation to net income ratio:
12.29%
In-depth Efficiency Analysis
Revenue generated per employee:
484.3K
Each employee generates 0% less revenue than industry average revenue per employee
EBITDA generated per employee:
100.3K
Each employee generates 0% less EBITDA than industry average revenue per employee
Profit generated per employee:
68.9K
Each employee generates 0% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 16.1K
Each employee generates 0% less free cash flow than industry average revenue per employee
Assets/Capital per employee
327.9K
Each employee generates 0% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- -14.41%
-
Competitors/Peer firms of
ERII
GOLAR LNG LIMITED (XNAS:GLNG)
NV5 Global, Inc. (XNAS:NVEE)
HAWAIIAN HOLDINGS, INC. (XNAS:HA)
EHang Holdings Limited (XNAS:EH)
THE SHYFT GROUP, INC. (XNAS:SHYF)
IES Holdings, Inc. (XNAS:IESC)
Oxford Square Capital Corp. (XNAS:OXSQL)
KFORCE INC. (XNAS:KFRC)
SMITH & WESSON BRANDS, INC. (XNAS:SWBI)
Current Analyst Ratings
Strong buy�4%
Buy�21%
Hold�0%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
107.51M
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
33.19M
74.32M
20.48M
25.11M
37.93M
12.82M
8.00K
58.41M
173.00K
173.00K
5.98M
22.27M
15.91M
15.30M
16.12M
820.00K
15.30M
Statement of Cash Flow
Date:
Period:
1.39M
Differed Income Tax :
351.00K
Stock Based Compensation :
1.88M
Change in Working Capital :
- 13460.00K
Accounts Receivables:
- 6042.00K
Other Working Capital:
- 1282.00K
Other Non-Cash Items:
345.00K
Net Cash Provided by Operating Activities:
- 1602.00K
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 29377.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
44.52M
37.70M
82.22M
27.47M
23.48M
5.80M
138.97M
34.21M
12.79M
34.00K
14.33M
11.07M
365.00K
72.80M
-
211.78M
4.36M
1.46M
-
2.06M
8.09M
15.97M
14.62M
226.00K
14.84M
-
30.81M
64.00K
45.00M
- 418.0K
-
March 31, 2022 at 6:00:00 AM
91.60M
180.97M
211.78M
52.04M
16.07M
- 28446.0K
10.42M
- 1976.00K
- 20932.00K
-
763.00K
- 8056.00K
-
-
- 7293.00K
- 11.00K
- 29838.00K
44.62M
74.46M
- 1602.00K
- 1976.00K
- 3578.00K
Our Proprietary Portfolio Rating
Our Rating:
-
Price Forecast/Expected Price in Next 5 Years of
ERII
2023
2024
2025
2026
2027
$24.32
$26.27
$28.37
$30.65
$33.10