Energy Recovery screens as cheap and fast-growing with insiders buying, but a confirmed death cross, leverage concerns, consecutive earnings misses, and a thin risk/reward ratio at the spot price all argue for caution.
Thesis pillars
- Thin Risk Reward Failed Asymmetry Gate↑Improving
- Attractive Valuation Strong Growth→Stable
- Confirmed Downtrend Death Cross↑Improving
- +2 more pillars — see the Why tab for full reasoning
Energy Recovery, Inc. (ERII) Stock Analysis
Falling Knife setup
Industrials · Pollution & Treatment Controls
Sell if holding. Analyst target reached at $7.89 — A.R:R 0.0:1 is below the 1.5:1 minimum. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: Consecutive earnings misses (2).
Energy Recovery, Inc. designs and manufactures pressure exchanger technology that recovers wasted energy in industrial fluid-flow processes, best known as the PX® energy recovery device that reduces energy use by up to 60% in seawater reverse osmosis desalination plants. The... Read more
Sell if holding. Analyst target reached at $7.89 — A.R:R 0.0:1 is below the 1.5:1 minimum. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: Consecutive earnings misses (2). Chart setup: Death cross, below all MAs, RSI 33, MACD bearish. Score 5.6/10, moderate confidence.
Passes 6/9 gates (clean insider activity, no SEC red flags, news events none recent, earnings proximity 74d clear, semi cycle peak clear, materials cycle peak clear). Fails on weak momentum and favorable risk/reward ratio and death cross (50MA < 200MA). Suitability: speculative.
About Energy Recovery, Inc.
About Energy Recovery, Inc.
Energy Recovery's pressure exchanger technology powers seawater reverse osmosis desalination plants producing over 43 million cubic meters of water per day worldwide, reducing energy use in those plants by up to 60% through its flagship PX device. The company sells through three Water-segment channels — Megaproject, original equipment manufacturer, and aftermarket — with a majority of water treatment revenue coming from Megaproject customers building large-scale plants with capacities above 50,000 cubic meters per day.
Energy Recovery's core PX Pressure Exchanger family serves seawater and brackish desalination as well as growing wastewater treatment markets, complemented by its Ultra High-Pressure PX for zero- and minimum-liquid-discharge applications and hydraulic turbochargers for lower-cost brackish and inter-stage boost uses. Demand depends primarily on continued construction of new large-scale desalination plants and wastewater facilities, particularly in Gulf Cooperation Council countries, China, Taiwan, and India, with typical Megaproject sales cycles running up to 36 months from tender to shipment. The company manufactures most products in its San Leandro and Tracy, California facilities, relying on a limited number of suppliers for vessel housings, stainless steel ports, and alumina powder. In February 2026, Energy Recovery decided to wind down its CO2 retail grocery refrigeration business within its Emerging Technologies segment following a fundamental change in that business's outlook.
Show full overview
Energy Recovery's revenue base leans on a small number of large, discretionary projects: because a majority of water-treatment revenue comes from Megaproject customers whose sales cycles can exceed 36 months, the timing of even one plant's tender-to-shipment schedule can swing annual results, a risk compounded by holdback provisions that can delay up to 10% of contract payments for as long as 24 months after shipment. That project-timing exposure sits alongside a supply-side dependency: the 10-K states the company relies on a limited number of suppliers for vessel housings, stainless steel ports, and alumina powder, components central to the PX ceramic cartridge, without long-term supply agreements to guarantee capacity.
See also: Industrials · Pollution & Treatment Controls
From Energy Recovery, Inc.'s most recent 10-K filing, extracted July 6, 2026.
Recent developments
updated 2026-08-23Recent Developments — Energy Recovery, Inc.
Latest news
- NEWS Energy Recovery (NASDAQ:ERII) Misses Q2 CY2026 Revenue Estimates, Stock Drops - StockStory — StockStory negative
- NEWS Energy Recovery (NASDAQ:ERII) Misses Q2 CY2026 Revenue Estimates, Stock Drops - Yahoo Finance — Yahoo Finance negative
- NEWS Energy Recovery (NASDAQ:ERII) Misses Q2 CY2026 Revenue Estimates, Stock Drops - finance.yahoo.com — finance.yahoo.com negative
- NEWS Energy Recovery (NASDAQ:ERII) Misses Q2 CY2026 Revenue Estimates, Stock Drops - The Globe and Mail — The Globe and Mail negative
- NEWS Energy Recovery (NASDAQ:ERII) Misses Q2 CY2026 Revenue Estimates, Stock Drops - FinancialContent — FinancialContent negative
Generated 2026-08-23T02:21:54Z.
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Rating Breakdown
3 floor-breakers·1 ceiling hit
Price action weak — below key moving averages, no momentum carry. Needs a base before trend-continuation setups apply.static
No near-term catalyst priced in. Thesis progression will come from fundamentals grinding, not event reaction.static
Ranks in the bottom of its industry peers on the composite signal. Better names in the same sector exist.static
Price Targets
Position Sizing
Risk Alerts
Earnings
Verdict History
Frequently Asked Questions
Sell if holding. Analyst target reached at $7.89 — A.R:R 0.0:1 is below the 1.5:1 minimum. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: Consecutive earnings misses (2). Chart setup: Death cross, below all MAs, RSI 33, MACD bearish. Prior stop was $7.35. Score 5.6/10, moderate confidence.
Take-profit target: $7.93 (+0.4% upside). Prior stop was $7.35. Stop-loss: $7.35.
Analyst target reached - limited upside remaining; Consecutive earnings misses (2); Negative momentum.
Energy Recovery, Inc. trades at a P/E of 30.4 (forward 16.3). TrendMatrix value score: 6.6/10. Verdict: Sell.
10 analysts cover ERII with a consensus score of 3.8/5. Average price target: $9.
What does Energy Recovery, Inc. do?Energy Recovery, Inc. designs and manufactures pressure exchanger technology that recovers wasted energy in industrial...
Energy Recovery, Inc. designs and manufactures pressure exchanger technology that recovers wasted energy in industrial fluid-flow processes, best known as the PX® energy recovery device that reduces energy use by up to 60% in seawater reverse osmosis desalination plants. The company sells to megaproject developers, OEMs, and aftermarket customers across its Water segment (desalination and wastewater treatment), and is winding down the CO2 retail grocery refrigeration business within its Emerging Technologies segment as of February 2026.