Energy Recovery (NASDAQ:ERII) and Graham (NYSE:GHM) Financial Survey

Energy Recovery (NASDAQ:ERII) and Graham (NYSE:GHM) are both small-cap industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Profitability

This table compares Energy Recovery and Graham’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Energy Recovery	5.15%	2.82%	2.48%
Graham	5.05%	11.56%	5.60%

Earnings and Valuation

This table compares Energy Recovery and Graham”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Energy Recovery	$134.99 million	2.73	$22.96 million	$0.09	80.78
Graham	$245.29 million	3.99	$12.50 million	$1.15	72.51

Energy Recovery has higher earnings, but lower revenue than Graham. Graham is trading at a lower price-to-earnings ratio than Energy Recovery, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

83.6% of Energy Recovery shares are owned by institutional investors. Comparatively, 69.5% of Graham shares are owned by institutional investors. 2.5% of Energy Recovery shares are owned by insiders. Comparatively, 2.4% of Graham shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Energy Recovery and Graham, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Energy Recovery	2	3	0	0	1.60
Graham	0	2	4	0	2.67

Energy Recovery currently has a consensus price target of $11.67, indicating a potential upside of 60.48%. Graham has a consensus price target of $116.67, indicating a potential upside of 39.91%. Given Energy Recovery’s higher probable upside, analysts plainly believe Energy Recovery is more favorable than Graham.

Risk & Volatility

Energy Recovery has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, Graham has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500.

Summary

Graham beats Energy Recovery on 8 of the 14 factors compared between the two stocks.

About Energy Recovery

Energy Recovery, Inc. develops technologies designed to improve the efficiency of industrial processes. The company is best known for its pressure-exchanger technology, which transfers energy from high-pressure fluid streams to incoming fluids. Its products are used primarily in seawater reverse osmosis desalination, where they help reduce the energy required to produce fresh water. Energy Recovery also offers pumps and related equipment for desalination and other industrial applications. Founded in 1992 and headquartered in San Leandro, California, the company serves customers in markets around the world.

About Graham

Graham Corporation designs and manufactures engineered equipment used to create and maintain vacuum conditions and transfer heat. Its products include steam jet ejectors, vacuum systems, surface condensers and heat exchangers for industrial applications. The company also provides turbomachinery through its Barber-Nichols business, including pumps, compressors and turbines used in aerospace, defense, energy and other markets. Graham’s equipment serves customers in industries such as chemical processing, refining, power generation and naval defense.