Energy Recovery, Inc. logo ERII - Energy Recovery, Inc.

Price: -- -- | CONSENSUS: Buy DETAILS
STRONG
BUY 1
BUY 10
HOLD 4
SELL 1
STRONG
SELL 0
| PRICE TARGET: $12.50 DETAILS
HIGH: $13.00
LOW: $12.00
MEDIAN: $12.50
CONSENSUS: $12.50
UPSIDE: 41.24%
AlphaVal

AlphaVal

Deterministic, archetype-aware fair value

Platform & Compounding FCF 50% confidence

Primary model: Two-stage FCF DCF

Valuation Signal Fair Value Mild
Trading 3.2% below fair value
Current Price $8.85
Bear Case $6.46 27.0% downside ($6.46 - $8.85) / $8.85 = -27.0% 9% stage 1 growth, 11% discount
Fair Value $9.14 3.3% upside ($9.14 - $8.85) / $8.85 = 3.3% 14% stage 1 growth, 11% discount
Bull Case $12.07 36.4% upside ($12.07 - $8.85) / $8.85 = 36.4% 19% stage 1 growth, 11% discount

Adjust Assumptions

14.3%
11.0%
3.0%

Key Value Driver

FCF growth rate (14% base case)

Terminal Value % of EV 42%
Implied Market Multiple 33.5x

Plain-Language Summary

Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $12.50 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $9.14 per share.

Warnings

⚠ Stock-based employee pay equals 34% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
ℹ Wall Street's average price target is $12.50 (from 16 analysts). Our estimate is 36% below the consensus -- consider that gap carefully.

Key Risks

  • P/E alone misleads — earnings depressed by growth investment
  • Cyclical or commodity businesses may be misclassified as platforms
  • Terminal value dominance suggests sensitivity to long-run assumptions