ERIIEnergy Recovery, Inc.
Is the business good?
The checks split: earnings fully cash-backed (3.3×), but margins compressing.
Operating profit is fully backed by cash. Conversion is improving vs a year ago.
Operating margin has narrowed over the past few years, profitability per dollar of sales is eroding.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is ERII?
Energy Recovery, Inc. earns 14% on the capital it employs against a 9.0% cost of capital, so the business is worth more the bigger it gets.
Return on invested capital · cost of capital 9.0% · 5.2 points above what the capital costs: growth creates value
- Operating margin
- 12%
Operating margin · Pollution & Treatment Controls median 5.6% · 12 months to Q2 2026
- Cash conversion
- 3.33×
Cash conversion · 1.06× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- −5.5%
Share count, year on year · bought back, each share owns more of the company
| Year | Operating margin |
|---|---|
| FY2020 | 26% |
| FY2021 | 13% |
| FY2022 | 20% |
| FY2023 | 15% |
| FY2024 | 14% |
| FY2025 | 18% |
Details›
- Gross margin12 months to Q2 2026
- 64%
- Operating margin12 months to Q2 2026
- 12%
- Net margin12 months to Q2 2026
- 13%
- Free cash flow margin
- 32%
- R&D as % of revenue
- 10%
- Revenue, trailing twelve months
- $121M
- Free cash flow, trailing twelve months
- $39M
- Net income, trailing twelve months
- $15M
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 14%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.