Energy RecoveryERII -1.19%71 Gross Margin % is 27.84% as of Mar. 2026, which is 59% below its 10-year median of 68.21. GuruFocus rates ERII with a GF Score™ of 71/100 and a GF Value™ of $14.81 (Significantly Undervalued). The stock has 5 warning signs investors should review. Among 3,003 Industrial Products companies, Energy Recovery ranks better than 96.4% on this metric.
Energy Recovery Inc gross margin has been in long-term decline. The average rate of decline per year is -1.2%.
The historical rank and industry rank for Energy Recovery's Gross Margin % or its related term are showing as below:
ERII'
s Gross Margin % Range Over the Past 10 Years
Min: 63.07 Med: 68.21 Max: 72.08
Current: 63.07
During the past 13 years, the highestGross Margin % of Energy Recovery was 72.08%. The lowest was 63.07%. And the median was 68.21%.
ERII's Gross Margin % is ranked better than 96.4% of 3003
companies
in the Industrial Products industry
Industry Median: 26.79
vs ERII: 63.07
Energy Recovery had a gross margin of 27.84% for the quarter that ended in Mar. 2026 => Competition eroding margins
The 5-Year average Growth Rate of Gross Margin for Energy Recovery was -1.20% per year.
Energy Recovery (NAS:ERII) Gross Margin % Explanation
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Energy Recovery had a gross margin of 27.84% for the quarter that ended in Mar. 2026 => Competition eroding margins
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Energy Recovery Gross Margin % Related Terms
Energy Recovery Gross Margin % Historical Data
* Premium members only.
The historical data trend for Energy Recovery's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
ERII vs ARQ, FTEK, BCHT: Gross Margin % Comparison
For the Pollution & Treatment Controls subindustry, Energy Recovery's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Energy Recovery Gross Margin % vs Industrial Products Industry
For the Industrial Products industry and Industrials sector, Energy Recovery's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Energy Recovery's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Energy Recovery (ERII) has a Gross Margin % of 27.84% as of Mar. 2026. Gross margin is the ratio of total gross profit to net sales. View historical data on Energy Recovery and its competitors. This is 59% below median its historical median of 68.21. Over the past decade, Energy Recovery's Gross Margin % has ranged from 63.07 to 72.08. According to the industry distribution chart, Energy Recovery ranks #108 out of 3003 companies in the Industrial Products industry, placing it in the top 3.6%.
Is Energy Recovery's Gross Margin % too high?
Energy Recovery's current Gross Margin % of 27.84% is 59% below median its 10-year median of 68.21. Over the past 10 years, this metric has ranged from a low of 63.07 to a high of 72.08. The Industrial Products industry median Gross Margin % is 26.79. Energy Recovery's value of 27.84% is 3.9% above this industry median. Based on the distribution chart, Energy Recovery ranks #108 out of 3003 companies in the Industrial Products industry, which is in the top quartile — a strong position relative to peers. Overall, Energy Recovery has a GF Score™ of 71/100 and is considered Significantly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Energy Recovery's Gross Margin % compare to ARQ and FTEK?
According to the Industrial Products industry distribution chart, Energy Recovery ranks #108 out of 3003 companies for Gross Margin %. This places Energy Recovery in the top 4% of its industry — outperforming the majority of peers. The industry median Gross Margin % is 26.79. Energy Recovery's value of 27.84% is 3.9% above this benchmark. Historically, Energy Recovery's own Gross Margin % has ranged from 63.07 to 72.08 over the past decade. While the company's 10-year median is 68.21 vs. the industry median of 26.79, Energy Recovery has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for an Industrial Products company?
The median Gross Margin % among Industrial Products companies is 26.79, based on 3,003 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Energy Recovery's current Gross Margin % of 27.84% is 3.9% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Energy Recovery and its competitors. For the Industrial Products industry, the median Gross Margin % is 26.79 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Energy Recovery's current Gross Margin % is 27.84%, which is 59% below median its own 10-year median of 68.21. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Energy Recovery stock overvalued right now?
Based on GuruFocus' analysis, Energy Recovery (ERII) is currently considered Significantly Undervalued. The stock's GF Value™ is $14.81, compared to a current price of $8.77 — trading 40.8% below its estimated fair value. The current Gross Margin % is 27.84%, which is 59% below median its 10-year median of 68.21 and 3.9% above the Industrial Products industry median of 26.79. Energy Recovery's overall GF Score™ is 71/100 with 5 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Energy Recovery (ERII), the current Gross Margin % is 27.84% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Energy Recovery (ERII) Overvalued in 2026?
Based on GuruFocus' analysis, Energy Recovery stock appears to be undervalued.
The current stock price of $8.77 is trading 40.8% below its estimated GF Value™ of $14.81.
GuruFocus considers Energy Recovery to be Significantly Undervalued.
Key valuation signals for ERII:
Gross Margin %: 27.84% (59% below median its 10-year median of 68.21)
GF Value™: $14.81 vs. price of $8.77 (40.8% below fair value)
Industry Position: 3.9% above the Industrial Products median (#108 of 3003)
No single metric tells the full story. See the ERII stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Energy Recovery Inc designs and manufactures energy-saving technologies. The firm uses its proprietary pressure exchanger technology to help customers in multiple industries improve their operations and lower their emissions. Using its proprietary technology, it offers energy recovery devices, including pressure exchangers, pumps, and turbochargers, mainly used for seawater desalination and wastewater treatment. Additionally, the company is involved in the development of emerging technologies, such as the PX G1300 used in industrial and commercial refrigeration applications. The firm's reportable operating segments are: Water, which generates maximum revenue, and Emerging Technologies. Geographically, it generates maximum revenue from the Middle East, and the rest from other markets.
71GF Score
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