Energy Recovery Insider Trades Send A Signal

A substantial insider sell was reported on May 30, by Joshua Ballard, Chief Financial Officer at Energy Recovery ERII, based on the recent SEC filing.

What Happened: Ballard's recent move involves selling 4,051 shares of Energy Recovery. This information is documented in a Form 4 filing with the U.S. Securities and Exchange Commission on Thursday. The total value is $54,866.

Energy Recovery shares are trading down 0.97% at $13.29 at the time of this writing on Friday morning.

Delving into Energy Recovery's Background

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.

Breaking Down Energy Recovery's Financial Performance

Revenue Challenges: Energy Recovery's revenue growth over 3 months faced difficulties. As of 31 March, 2024, the company experienced a decline of approximately -9.78%. This indicates a decrease in top-line earnings. As compared to competitors, the company encountered difficulties, with a growth rate lower than the average among peers in the Industrials sector.

Insights into Profitability:

• Gross Margin: Achieving a high gross margin of 59.02%, the company performs well in terms of cost management and profitability within its sector.

• Earnings per Share (EPS): Energy Recovery's EPS lags behind the industry average, indicating concerns and potential challenges with a current EPS of 0.35.

Debt Management: The company maintains a balanced debt approach with a debt-to-equity ratio below industry norms, standing at 0.06.

Market Valuation:

• Price to Earnings (P/E) Ratio: Energy Recovery's P/E ratio of 39.47 is below the industry average, suggesting the stock may be undervalued.

• Price to Sales (P/S) Ratio: The current P/S ratio of 6.12 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 30.15 positions the company as being more valued compared to industry benchmarks.

Market Capitalization Analysis: The company exhibits a lower market capitalization profile, positioning itself below industry averages. This suggests a smaller scale relative to peers.

Now trade stocks online commission free with Charles Schwab, a trusted and complete investment firm.

The Importance of Insider Transactions

Insider transactions contribute to decision-making but should be supplemented by a comprehensive investment analysis.

In the context of legal matters, the term "insider" refers to any officer, director, or beneficial owner holding more than ten percent of a company's equity securities, as outlined by Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and significant hedge funds. Such insiders are obligated to report their transactions through a Form 4 filing, which must be completed within two business days of the transaction.

Pointing towards optimism, a company insider's new purchase signals their positive anticipation for the stock to rise.

Despite insider sells not always signaling a bearish sentiment, they can be driven by various factors.

Deciphering Transaction Codes in Insider Filings

Delving into transactions, investors typically prioritize those unfolding in the open market, as precisely 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.