3 models fit Energy Recovery Inc. Common Stock and they partly agree: 2 of 3 land within 15% of the average.
Two or more of our models back this value.
Near fair value(i)Bronze42
Valued as a mature, profitable company: Discounted cash flow, EV/EBITDA comparison, Graham number, and Dividend discount.
ACCE opinionEnergy Recovery Inc. Common Stock (ERII)
Fair value (3 models)
$7.03
ACCE price target
$7.10
Rating
Fairly valued
Horizon
12 months
Fair value published on 21 Oct 2026, 12:04 CEST; previously $9.86 since 16 Oct 2026, 00:00 CEST.
ACCE price target published on 15 Oct 2026, 00:00 CEST.
Rating published on 21 Oct 2026, 12:04 CEST.
Price used: $6.68 at the close on 23 Oct 2026, 22:00 CEST.
Models: Discounted cash flow, EV/EBITDA comparison, and Graham number.
Fair value: the average of the applicable valuation models (discounted cash flow, multiples, residual income, dividend discount, shareholder yield), each run on the latest financial statements and the market price shown. Opinion columns (fair value, target, rating) are shown apart from the data. Full methodology: acceinvestments.com/data/how-we-value-stocks
Conflicts of interest: The author holds no personal position in this security. General statement
Produced by ACCE Investments (acceinvestments.com)
Data
Price vs fair value
5.0% below
+5.2% to fair value
ACCE score
46
out of 100
Analysts
0% buy
4 covering
P/E
25.7x
forward 19.9x
1-year return
-62.6%
Dividend yield
0.00%
Energy Recovery Inc. Common Stock in four questions
Plain answers, details below
Free accounts get 5 full stock pages a month, including the four answers.
Overview
ACCE thesis
Energy Recovery makes pressure exchangers and the high-pressure pumps that go with them, mainly for seawater reverse osmosis desalination plants, where its devices recover energy from the brine stream and cut the power a plant needs. The moat is the installed base and the engineering know-how behind it, with gross margins at 65.4% showing the product still earns good pricing even as the business shrinks. The problem is that revenue fell 57.2% and operating margin sits at -41.9%, so the earnings base that a 26.6x trailing P/E implies is not what the business is currently producing. The reason to look harder is the gap between a forward P/E of 21.2 and trailing 26.6, which says the market expects earnings to recover, and that only matters if order flow for new desalination projects returns. The score of 45/100 and absence from any index reflect that the recovery case is unproven, so this is a turnaround to diligence, not a conclusion.
⚠ Investor warnings · 4 flagsAI-assisted·How I use AI
high
Revenue collapse
Revenue fell 57.2% year over year and 85.5% quarter over quarter, while the 5-year revenue CAGR is only +7.9%. The top line is not stabilised on the data provided.
high
Negative operating margin
Operating margin is -41.9% even though gross margin is 65.4%, so operating costs are far larger than the gross profit they support. Net margin of +12.7% rests on other income, not core operations.
moderate
Insider selling without buying
Insiders sold $4.75M across the last 10 disclosed transactions and bought nothing. Insider ownership is only 2.1%, so the signal is modest but one-directional.
moderate
Score down sharply in 90 days
The ACCE score fell 10 points from 56 to 46 over 90 days, with the momentum component at 17/100.
AI research notes
AI-assisted·How I use AIWritten Oct 20, 2026 · figures from 2026-06-30 · prices to Oct 23, 2026
Why it could do well
Free cash flow over the last twelve months reached $17M, and the stock's free cash flow yield stands at 5.1%.
The company carries almost no debt, with debt to equity at 0.05, and cut its diluted share count by 6.3% last year.
Why it could disappoint
Revenue fell 57.2% year over year, far below the company's 5-year average growth of 7.9% per year.
Returns are thin, with return on equity at 8.6% and return on invested capital at 8.7%, while the stock trades at a trailing P/E of 25.6x.
Each chip shows the exact figure and where it comes from. A claim without a source is not published.
Next results
Nov 4, 2026
We update the fair value about 2 days after the results, once the new figures are filed.Add to calendarGoogle
Walk me through this stock
Plain-English pros, cons, and what to watch. Pro feature.
PRO
Ask ACCE
Valuation
INVESTOR
Where ERII's valuation models land
Price
$6.68
Model fair value
$7.03
Model range
$6.21 to $8.36
Fair value $7.03
Price $6.68
The price sits inside the model range.
Model
Fair value
Upside
Discounted cash flow
Dividend discount
EV/EBITDA comparison
Graham number
Create a free account: 5 full stock pages a month, no card.
See what each model says, the assumptions behind it, the bad, normal and good cases, and why the fair value changed.
Quality
INVESTOR
Quality and conviction INVESTOR FEATURE
The full quality picture: a reason under every score, how the scores moved, and the conviction breakdown.
+A plain reason under every score
+Conviction breakdown and growth / value / quality / momentum scores