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Dr. Charlie Tian is the founder and CEO of GuruFocus.com, a leading global investment research platform established in 2004. With a Ph.D. in physics, Dr. Tian transitioned from science to finance, applying a data-driven, disciplined approach to value investing.
Energy Recovery has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.
Good Sign:
Energy Recovery Inc shows strong financial strength.
GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is rated on a scale of 1 to 10 and is based on these factors:
1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.
4. Other debt related ratios.
A higher score indicates a stronger financial position, with companies rated 7 or above considered financially stable and unlikely to face distress. Conversely, a score of 3 or below suggests potential financial difficulties, indicating a higher risk of distress.
GuruFocus does not calculate Energy Recovery's interest coverage with the available data.
Energy Recovery's debt to revenue ratio for the quarter that ended in Mar. 2026 was 0.23.
As of today, Energy Recovery's Altman Z-Score is 13.81.
Energy Recovery (NAS:ERII) Financial Strength Explanation
The rank is rated on a scale of 1 to 10. A higher score indicates a stronger financial position, with companies rated 7 or above considered financially stable and unlikely to face distress. Conversely, a score of 3 or below suggests potential financial difficulties, indicating a higher risk of distress.
Energy Recovery has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.
Energy Recovery Financial Strength Related Terms
ERII vs ZONE, ARQ, FTEK: Financial Strength Comparison
For the Pollution & Treatment Controls subindustry, Energy Recovery's Financial Strength, along with its competitors' market caps and Financial Strength 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 Financial Strength vs Industrial Products Industry
For the Industrial Products industry and Industrials sector, Energy Recovery's Financial Strength distribution charts can be found below:
* The bar in red indicates where Energy Recovery's Financial Strength falls into.
Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:
GuruFocus does not calculate Energy Recovery's interest coverage with the available data.
The higher the ratio, the stronger the company's financial strength is.
Good Sign:
Ben Graham prefers companies' interest coverage to be at least 5. Energy Recovery Inc has enough cash to cover all of its debt. Its financial situation is stable.
2. Debt to revenue ratio. The lower, the better.
Energy Recovery's Debt to Revenue Ratio for the quarter that ended in Mar. 2026 is
Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.
The zones of discrimination were as such:
When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.
Energy Recovery has a Z-score of 13.81, indicating it is in Safe Zones. This implies the Z-Score is strong.
Good Sign:
Altman Z-score of 13.81 is strong.
* 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.
Energy Recovery (ERII) has a Financial Strength of 8 as of Mar. 2026. The financial strength rank measures the strength of a company's balance sheet based on revenue and debt. View historical data on Energy Recovery and its competitors. This is near median its historical median of 8.00. Over the past decade, Energy Recovery's Financial Strength has ranged from 5.00 to 10.00.
Is Energy Recovery's Financial Strength too high?
Energy Recovery's current Financial Strength of 8 is near median its 10-year median of 8.00. Over the past 10 years, this metric has ranged from a low of 5.00 to a high of 10.00. Overall, Energy Recovery has a GF Score™ of 66/100 and is considered Significantly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Energy Recovery's Financial Strength compare to ZONE and ARQ?
Energy Recovery's Financial Strength of 8 can be compared against companies in the Industrial Products industry. Historically, Energy Recovery's own Financial Strength has ranged from 5.00 to 10.00 over the past decade. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Financial Strength for an Industrial Products company?
A good Financial Strength depends on the Industrial Products industry context. However, Financial Strength should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Financial Strength mean?
A high Financial Strength can signal that a stock is expensive relative to its fundamentals. The financial strength rank measures the strength of a company's balance sheet based on revenue and debt. View historical data on Energy Recovery and its competitors. Energy Recovery's current Financial Strength is 8, which is near median its own 10-year median of 8.00. 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 $14.11, compared to a current price of $9.22 — trading 34.7% below its estimated fair value. The current Financial Strength is 8, which is near median its 10-year median of 8.00. Energy Recovery's overall GF Score™ is 66/100 with 5 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Financial Strength calculated?
Financial Strength is calculated from a company's financial statements. For Energy Recovery (ERII), the current Financial Strength is 8 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 $9.22 is trading 34.7% below its estimated GF Value™ of $14.11.
GuruFocus considers Energy Recovery to be Significantly Undervalued.
Key valuation signals for ERII:
Financial Strength: 8 (near median its 10-year median of 8.00)
GF Value™: $14.11 vs. price of $9.22 (34.7% below fair value)
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.
66GF Score
Get the complete analysis for ERII
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