Noteworthy Insider Activity: David W Moon Invests $166K In Energy Recovery Stock

A significant insider buy by David W Moon, President and CEO at Energy Recovery ERII, was executed on February 29, and reported in the recent SEC filing.

What Happened: Moon's recent purchase of 10,750 shares of Energy Recovery, disclosed in a Form 4 filing with the U.S. Securities and Exchange Commission on Thursday, reflects confidence in the company's potential. The total transaction value is $166,732.

Tracking the Friday's morning session, Energy Recovery shares are trading at $16.06, showing a up of 2.75%.

Discovering Energy Recovery: A Closer Look

Energy Recovery Inc is an engineering-driven technology company. It is engaged in engineering, designing, manufacturing and supplying solutions that make industrial processes more efficient and sustainable. The company operates in three segments, Water, Emerging Technologies and Corporate. It offers energy recovery devices (ERDs) and pumps as well as related products and services to the global reverse osmosis desalination market. The company derives a majority of the revenue from the Water segment. Geographically, the company operates in the U.S. and other international countries.

Financial Insights: Energy Recovery

Revenue Growth: Energy Recovery's revenue growth over a period of 3 months has been noteworthy. As of 31 December, 2023, the company achieved a revenue growth rate of approximately 35.23%. This indicates a substantial increase in the company's top-line earnings. When compared to others in the Industrials sector, the company excelled with a growth rate higher than the average among peers.

Holistic Profitability Examination:

• Gross Margin: With a high gross margin of 69.07%, the company demonstrates effective cost control and strong profitability relative to its peers.

• Earnings per Share (EPS): Energy Recovery's EPS is below the industry average, signaling challenges in bottom-line performance with a current EPS of 0.35.

Debt Management: With a below-average debt-to-equity ratio of 0.06, Energy Recovery adopts a prudent financial strategy, indicating a balanced approach to debt management.

Insights into Valuation Metrics:

• Price to Earnings (P/E) Ratio: A higher-than-average P/E ratio of 42.3 suggests caution, as the stock may be overvalued in the eyes of investors.

• Price to Sales (P/S) Ratio: The current P/S ratio of 7.04 is above industry norms, reflecting an elevated valuation for Energy Recovery's stock and potential overvaluation based on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): A high EV/EBITDA ratio of 32.18 reflects market recognition of Energy Recovery's value, positioning it as more highly valued compared to industry peers.

Market Capitalization Analysis: Reflecting a smaller scale, the company's market capitalization is positioned below industry averages. This could be attributed to factors such as growth expectations or operational capacity.

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The Impact of Insider Transactions on Investments

Insightful as they may be, insider transactions should be considered alongside a thorough examination of other investment criteria.

From a legal standpoint, the term "insider" pertains to any officer, director, or beneficial owner holding more than ten percent of a company's equity securities as outlined in Section 12 of the Securities Exchange Act of 1934. This encompasses executives in the c-suite and significant hedge funds. These insiders are mandated to inform the public of their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

A company insider's new purchase is a indicator of their positive anticipation for a rise in the stock.

While insider sells may not necessarily reflect a bearish view and can be motivated by various factors.

Cracking Transaction Codes

Digging into the details of stock transactions, investors frequently turn their attention to those taking place in the open market, as outlined in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Energy Recovery's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.