Energy recovery device manufacturer Energy Recovery (NASDAQ: ERII) will be reporting earnings this Wednesday after market hours. Here’s what to look for.
Energy Recovery beat analysts’ revenue expectations last quarter, reporting revenues of $9.71 million, up 20.3% year on year. It was a slower quarter for the company, with a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates.
Is Energy Recovery a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members.
This quarter, the market is expecting Energy Recovery’s revenue to decline 32.9% year on year, a reversal from the 3.1% increase it recorded in the same quarter last year.
Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. Energy Recovery has missed Wall Street’s revenue estimates multiple times over the last two years.
Looking at Energy Recovery’s peers in the industrial machinery segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Xylem delivered year-on-year revenue growth of 1.5%, meeting analysts’ expectations, and Columbus McKinnon reported revenues up 125%, topping estimates by 5.9%. Xylem traded up 1.6% following the results while Columbus McKinnon was also up 31.1%.
Read our full analysis of Xylem’s results here and Columbus McKinnon’s results here.
In the last year or so, investors have shifted their focus from one macro dynamic to the next (AI disintermediation and AI investment to geopolitical conflict, interest rates, and the health of the wider economy). While some of the industrial machinery stocks have shown solid performance in this choppy environment, the group has generally underperformed, with share prices down 2% on average over the last month. Energy Recovery is down 1.7% during the same time and is heading into earnings with an average analyst price target of $11 (compared to the current share price of $8.85).
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