Complete ERII Stock Valuation Analysis
Comprehensive intrinsic value analysis using 6 different methodologies
ERII DCF Analysis
ERII (Energy Recovery, Inc.) discounted cash flow analysis with multiple scenarios, growth assumptions, and terminal value calculations
Financial Projections
| Metrics | 2022 (Historical) | 2023 (Historical) | 2024 (Historical) | 2025 (Projected) | 2026 (Projected) | 2027 (Projected) | 2028 (Projected) | 2029 (Projected) |
|---|---|---|---|---|---|---|---|---|
| Revenue | $125.6M | $128.3M | $144.9M | $157.6M | $170.0M | $182.0M | $193.6M | $204.7M |
| Revenue Growth % | - | 2.2% | 12.9% | 8.7% | 7.9% | 7.1% | 6.4% | 5.7% |
| EBIT | $18.5M | $19.1M | $22.2M | $23.6M | $25.6M | $27.6M | $29.6M | $31.5M |
| EBIT Margin % | 14.8% | 14.8% | 15.3% | 15.0% | 15.1% | 15.2% | 15.3% | 15.4% |
| Tax Rate % | 7.8% | 5.3% | 10.4% | 8.3% | 9.9% | 11.6% | 13.3% | 15.0% |
| NOPAT | $17.1M | $18.0M | $19.9M | $21.6M | $23.1M | $24.4M | $25.6M | $26.8M |
| NOPAT Margin % | 13.6% | 14.1% | 13.7% | 13.7% | 13.6% | 13.4% | 13.2% | 13.1% |
| Capex | $3.1M | $2.6M | $1.3M | $5.5M | $5.7M | $5.8M | $5.8M | $5.8M |
| Capex / Revenue % | 2.5% | 2.0% | 0.9% | 3.5% | 3.3% | 3.2% | 3.0% | 2.9% |
| Depreciation | $6.3M | $5.7M | $5.8M | $7.1M | $7.7M | $8.2M | $8.7M | $9.2M |
| D&A / Revenue % | 5.0% | 4.5% | 4.0% | 4.5% | 4.5% | 4.5% | 4.5% | 4.5% |
| Change in NWC | $13.4M | $18.6M | $-13.8M | $-2.7M | $-2.3M | $-2.0M | $-1.7M | $-1.4M |
| NWC Change / Revenue % | 10.7% | 14.5% | -9.5% | -1.7% | -1.4% | -1.1% | -0.9% | -0.7% |
| Unlevered FCF | $6.8M | $2.6M | $38.2M | $25.9M | $27.4M | $28.9M | $30.2M | $31.6M |
| UFCF % Chg. | - | -61.3% | 1346.0% | -32.1% | 5.7% | 5.3% | 4.8% | 4.4% |
| FCF / Revenue % | 5.4% | 2.1% | 26.3% | 16.5% | 16.1% | 15.8% | 15.6% | 15.4% |
| Discount Factor | - | - | - | 0.920 | 0.847 | 0.780 | 0.718 | 0.661 |
| Present Value of FCF | - | - | - | $23.9M | $23.2M | $22.5M | $21.7M | $20.9M |
| Sum of PV of UFCF | - | - | - | $23.9M | $47.1M | $69.6M | $91.3M | $112.2M |
WACC Calculation
Weighted Average Cost of Capital used for discounting cash flows.
| WACC Calculation | Value |
|---|---|
| Cost of Debt | 7.2% |
| Tax Rate | 8.3% |
| After Tax Cost of Debt | 6.6% |
| Risk Free Rate | 4.24% |
| Market Risk Premium | 4.3% |
| Beta | 1.02 |
| Cost of Equity | 8.7% |
| Total Debt | $11.3M |
| Market Cap | $695.7M |
| Total Capital | $707.0M |
| Debt Weighting | 1.6% |
| Equity Weighting | 98.4% |
| WACC | 8.6% |
Terminal Value
Choose between perpetuity growth or exit multiple methods.
| Terminal Value Calculation | Value |
|---|---|
| Terminal Growth Rate | 2.5% |
| Final Year FCF | $31.6M |
| Terminal Value | $526.7M |
| PV of Terminal Value | $347.9M |
| Cumulative PV of UFCF | $112.2M |
| Net Debt | $-18.3M |
| Equity Value | $478.4M |
| Shares Outstanding | 57.8M |
| Implied Share Price | $8 |
| Current Share Price | $13 |
| Implied Upside/(Downside) | -35.2% |
Valuation Summary
$8.27
Implied Price
$12.77
Current Price
-35.2%
Upside/Downside
8.6%
WACC
ERII Peer Valuation Analysis
Relative valuation based on comparable company trading multiples
Peer Valuation Analysis
Fair Value Range Analysis
Based on median multiples from 10 peer companies in Industrials
P/E Ratio
$12.48
-2.2%
Peer Median: 32.0x
EV/EBITDA
$7.16
-43.9%
Peer Median: 14.3x
P/S Ratio
$4.98
-61.0%
Peer Median: 1.9x
Interpretation: Each multiple provides a different perspective on fair value. Consider which multiple is most relevant for ERII's business model and current situation.
Multiple Comparison
| Multiple | ERII Current | Peer Median | Peer Average | Premium/Discount | Assessment |
|---|---|---|---|---|---|
| P/E Ratio | 32.7x | 32.0x | 35.3x | 2.3% | Fair Value |
| EV/EBITDA | 24.8x | 14.3x | 16.0x | 73.5% | Overvalued |
| P/S Ratio | 4.9x | 1.9x | 2.3x | 156.1% | Overvalued |
Peer Companies
Click any company to view their valuation
| Company | Market Cap | P/E Ratio | EV/EBITDA | P/S Ratio |
|---|---|---|---|---|
| $1.18B | 32.0x | 10.7x | 1.5x | |
| $1.00B | 22.5x | 11.9x | 1.5x | |
| $0.96B | 66.3x | 18.7x | 1.9x | |
| $0.96B | 0.0x | 0.0x | 1.7x | |
| $0.74B | 7.5x | 4.6x | 0.2x | |
| $0.70B | 32.7x | 24.8x | 4.9x | |
| $0.46B | 49.3x | 9.2x | 0.5x | |
| $0.54B | 59.5x | 31.3x | 2.7x | |
| $0.35B | 20.4x | 14.3x | 3.6x | |
| $90.01B | 27.1x | 18.7x | 4.5x |
ERII Graham Number
Benjamin Graham's conservative valuation formula for defensive investors
Input Data
| EPS (TTM) | $0.39 | Latest 10-K |
| Book Value per Share | $3.63 | Latest 10-K Balance Sheet |
| Graham Constant | 22.5 | Benjamin Graham's formula |
Graham Number Result
$5.65
Intrinsic Value
$12.77
Current Price
-55.8%
Upside/Downside
Confidence: High
Conservative value investing approach
Calculation Breakdown
Formula:
√(22.5 × EPS × BVPS)
Step 1: Multiply constant by EPS
22.5 × 0.39 = 8.78
Step 2: Multiply by Book Value per Share
8.78 × 3.63 = 31.90
Step 3: Take square root
√31.90 = 5.65
Graham Number Result:
$5.65
ERII Graham Intrinsic Value
Growth-adjusted intrinsic value with two formula variants
Formula Selection
V = EPS × (8.5 + 2g)
Graham's original P/E shortcut for growth, no interest-rate adjustment
V = [EPS × (8.5 + 2g) × 4.4] / Y
Graham's 1974 refinement: adds rate-environment sensitivity
Active Formula: Base-Growth
0.39 × (8.5 + 2 × 17.0%)
Input Data & Growth Assumptions
Current EPS (TTM)$0.39
Latest 10-K • 2024-12-31T00:00:00
Historical 3Y17.0%
Financial statements
Historical 5Y14.9%
Financial statements
Custom
%
Enter a positive growth rate estimate (0-50%)
Graham Intrinsic Value Result
$16.56
Intrinsic Value
$12.77
Current Price
+29.7%
Upside/Downside
Base Formula
Growth: 17.0%
ERII Peter Lynch Fair Value
Growth-based valuation using PEG ratio analysis for growth stocks
Fair Value Calculation
EPS (TTM)$0.39
Latest 10-K • 2024-12-31T00:00:00
Historical 3Y17.0%
3-year earnings growth
Historical 5Y14.9%
5-year earnings growth
17.0%
1%50%
Fair Value Formula: EPS × Growth Rate
$0.39 × 17.0% = $6.62
$6.62
Fair Value
$12.77
Current Price
-48.1%
Upside/Downside
PEG Analysis
32.7x
Current P/E
17.0%
Growth Rate
1.93
PEG Ratio (P/E ÷ Growth Rate)
Overvalued
PEG Ratio Interpretation:
• PEG < 1.0: Undervalued (growth exceeds P/E)
• PEG = 1.0: Fairly valued (ideal Lynch ratio)
• PEG > 1.5: Overvalued (paying premium for growth)
Peter Lynch's Rule:
"The P/E ratio of any company that's fairly priced will equal its growth rate." A stock with 15% growth should trade at a P/E of 15 (PEG = 1.0).
ERII Earnings Power Value (EPV)
Normalized earnings-based valuation for sustainable earning power assessment
Earnings Normalization
| Earnings Component | Amount ($B) | Description |
|---|---|---|
| Reported Earnings | 0.0 | Base earnings from financial statements |
| Normalized Earnings | 0.0 | Final normalized earning power |
One-time Items: Remove non-recurring gains/losses
Cyclical Adjustment: Normalize for economic cycle position
EPV Result
$4.47
EPV per Share
$12.77
Current Price
-65.0%
Upside/Downside
8.9%
WACC: 8.9% (calculated from market data)
Confidence: High
Normalized earnings approach
EPV Calculation Breakdown
Enterprise Value Calculation
| Normalized Earnings | $0.0B |
| Cost of Capital | 8.9% |
| Enterprise Value | $0.3B |
Per Share Value
| Enterprise Value | $0.3B |
| Shares Outstanding | 0.1B |
| EPV per Share | $4.47 |
WACC Components
| Cost of Equity | 9.0% |
| After-Tax Cost of Debt | 3.5% |
| Equity Weight | 98.5% |
| Debt Weight | 1.5% |
| WACC | 8.9% |