Head-To-Head Review: CECO Environmental (NASDAQ:CECO) & Energy Recovery (NASDAQ:ERII)

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

Institutional and Insider Ownership

83.6% of Energy Recovery shares are held by institutional investors. Comparatively, 68.1% of CECO Environmental shares are held by institutional investors. 3.2% of Energy Recovery shares are held by company insiders. Comparatively, 18.4% of CECO Environmental shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Energy Recovery and CECO Environmental”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Energy Recovery	$144.95 million	5.39	$23.05 million	$0.42	34.98
CECO Environmental	$557.93 million	3.10	$12.96 million	$1.43	34.19

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Energy Recovery	17.02%	11.67%	10.23%
CECO Environmental	7.99%	10.00%	3.39%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Energy Recovery and CECO Environmental, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Energy Recovery	0	1	3	2	3.17
CECO Environmental	0	0	6	0	3.00

Energy Recovery currently has a consensus price target of $18.75, indicating a potential upside of 27.64%. CECO Environmental has a consensus price target of $50.80, indicating a potential upside of 3.91%. Given Energy Recovery’s stronger consensus rating and higher possible upside, analysts clearly believe Energy Recovery is more favorable than CECO Environmental.

Volatility and Risk

Energy Recovery has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500. Comparatively, CECO Environmental has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500.

Summary

Energy Recovery beats CECO Environmental on 10 of the 15 factors compared between the two stocks.

About Energy Recovery

Energy Recovery, Inc., together with its subsidiaries, designs, manufactures, and sells energy efficiency technology solutions in the Americas, the Middle East, Africa, Asia, and Europe. The company operates through Water and Emerging Technologies segments. The company offers high and low pressure, and ultra pressure exchangers; AT and LPT hydraulic turbochargers; and high-pressure feed and circulation booster pumps for use in seawater and brackish desalination, and wastewater treatment. It also provides PX G1300, which reduces energy consumption and operating costs of carbon dioxide-based refrigeration systems; and spare parts, as well as repair, field, and commissioning services. It sells its products under the ERI, PX, Pressure Exchanger, PX Pressure Exchanger, Ultra PX, PX G, PX G1300, PX PowerTrain, AT, and Aquabold brands to original equipment manufacturers, supermarket chains, cold storage facilities, refrigeration system installers, and other industrial users; aftermarket customers consisting of desalination plant owners and operators; and project developers, end-users, and industry consultants, as well as engineering, procurement, and construction firms. Energy Recovery, Inc. was incorporated in 1992 and is headquartered in San Leandro, California.

About CECO Environmental

CECO Environmental Corp. provides critical solutions in industrial air quality, industrial water treatment, and energy transition solutions worldwide. It operates in two segments: Engineered Systems and Industrial Process Solutions. The company engineers, designs, manufactures, and installs non-metallic expansion joints and flow control products, including rubber expansion joints, ducting expansion joints, and industrial pinch and duck bill valves; membrane-based industrial water and wastewater treatment systems; and provides dust and fume extraction solutions comprising consultation, design, manufacturing, installation, and service, as well as water and wastewater treatment solutions. It offers engineered and configured products and solutions, including dampers and diverters, expansion joints, selective catalytic reduction systems, severe-service and industrial cyclones, dust collectors, thermal oxidizers, filtration systems, wet and dry scrubbers, separators and coalescers, water treatment packages, metallic and non-metallic pumps, industrial silencers, and fluid handling equipment, as well as plant engineering services and engineered design build fabrication services. In addition, the company offers industrial engineered noise control solutions, including custom acoustical gen-set packages, ambient air baffles, acoustical louvres, and skid enclosures; process filtration solutions for hydrocarbon and chemical processing; and energy and water conservation systems and equipment. The company markets its products and services to natural gas processors, transmission and distribution companies, refineries, power generators, industrial manufacturing, engineering and construction companies, semiconductor manufacturers, compressor manufacturers, beverage can manufacturers, metals and minerals, and electric vehicle producers. CECO Environmental Corp. was founded in 1869 and is headquartered in Dallas, Texas.