Energy Recovery, Inc. (ERII)
NASDAQIndustrialsIndustrial - Pollution & Treatment ControlsSnapshot 2026-09-09
$7.38-4.16%
Close 2026-09-09 · 1-day change
NASDAQIndustrialsIndustrial - Pollution & Treatment ControlsSnapshot 2026-09-09
Warn: Primary pillar under pressure — Stable and effective CEO leadership: Interim CEO appointed 2026-06-11; permanent transition target not yet met.
Energy Recovery aims for revenue of at least $135 million in 2026. The company has a new CEO and a $25 million share buyback program. Its valuation is cheap compared to peers with a P/E of 15.7 versus 35.3. These factors could support a recovery if execution improves.
Recent earnings misses and a business exit show challenges. Revenue is expected to decline about 8% next year. The CEO transition adds uncertainty. The stock is down 24% from its high, reflecting these risks.
The market prices in about 8% revenue decline and a 27% discount to our fair value near $12. Our view is cautious given the turnaround risks and mixed management signals.
Breaks if: Buyback program is cancelled or materially reduced
Breaks if: Interim CEO replaced without clear plan or further leadership turmoil
This is not a price target or investment advice.
A long-form read on the 1–3 year hold thesis. It updates when the weekly evidence changes.
This investment represents a turnaround situation. The company is currently loss-making and navigating a CEO transition while aiming to improve revenue growth in a challenging sector backdrop.
The market appears to price in a low level of fragility, suggesting that expectations are somewhat justified. ERII is viewed as cheap compared to its peers, with a notable expectations gap indicating that the market may not fully anticipate future challenges.
Management has emphasized revenue growth despite recent declines, but the overall financial performance remains neutral. The near-term risk of missing earnings is moderate, reflecting the company's position in a high-miss-rate industry.
The long-term thesis hinges on the company's ability to execute on its revenue growth targets and the outcomes of the CEO transition. Additionally, the performance of sector bellwethers will be critical, as their results could influence ERII's momentum.
The most important moves since the prior daily snapshot.
Yes, our read has strengthened. The latest earnings beat supports this improved outlook. There are no new threats impacting the thesis.
as of 2026-09-09
Review the evidence to watch, what would become a concern, and what would make it less concerning.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.
Breaks if: Revenue falls below $120 million in FY26
Management aims to grow revenue in 2026 despite recent declines and challenging market conditions.
Stated as a priority in 2 of last 2 quarters. Revenue declined significantly from $28.1M in Q2 2025 to $12.0M in Q2 2026 (-57%), but grew from $8.1M in Q1 2025 to $9.7M in Q1 2026 (20%). Management continues to emphasize revenue growth for 2026 despite recent declines, indicating limited progress with challenging market conditions.
“Management has released a letter to shareholders reviewing business and financial updates from the second quarter and discussing our outlook for 2026.”
“Management has released a letter to shareholders reviewing business and financial updates from the first quarter and discussing our outlook for 2026.”
In the next 1 to 3 years, ERII's success will depend on its management execution and external market conditions. Not investment advice.