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Attractive stocks have exceptional fundamentals. In the case of Energy Recovery, Inc. (NASDAQ:ERII), there's is a financially-sound company with a great history and a excellent future outlook. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Energy Recovery here.
Flawless balance sheet with solid track record
ERII has a strong track record of performance. In the previous year, ERII delivered an impressive double-digit return of 21% Not surprisingly, ERII outperformed its industry which returned 14%, giving us more conviction of the company's capacity to drive bottom-line growth going forward.
ERII's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that ERII has sufficient cash flows and proper cash management in place, which is a crucial insight into the health of the company. Investors should not worry about ERII’s debt levels because the company has none! It has only utilized funding from its equity capital to run the business, which is typically normal for a small-cap company. ERII has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.
For Energy Recovery, I've compiled three fundamental aspects you should further research:
- Valuation: What is ERII worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ERII is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does ERII return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from ERII as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ERII? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.