Financial Analysis: Energy Recovery (NASDAQ:ERII) vs. Euro Tech (NASDAQ:CLWT)

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

Institutional and Insider Ownership

2.9% of Euro Tech shares are held by institutional investors. Comparatively, 83.6% of Energy Recovery shares are held by institutional investors. 79.0% of Euro Tech shares are held by company insiders. Comparatively, 3.2% of Energy Recovery shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Euro Tech and Energy Recovery, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Euro Tech	0	0	0	0	0.00
Energy Recovery	0	1	2	2	3.20

Energy Recovery has a consensus target price of $18.67, indicating a potential upside of 31.36%. Given Energy Recovery’s stronger consensus rating and higher probable upside, analysts plainly believe Energy Recovery is more favorable than Euro Tech.

Volatility & Risk

Euro Tech has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, Energy Recovery has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Euro Tech	$15.38 million	0.64	$730,000.00	N/A	N/A
Energy Recovery	$144.95 million	5.22	$23.05 million	$0.42	33.83

Energy Recovery has higher revenue and earnings than Euro Tech.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Euro Tech	N/A	N/A	N/A
Energy Recovery	17.02%	11.67%	10.23%

Summary

Energy Recovery beats Euro Tech on 12 of the 13 factors compared between the two stocks.

About Euro Tech

Euro Tech Holdings Company Limited primarily distributes water treatment equipment, laboratory instruments, analyzers, test kits and related supplies, and power generation equipment to commercial customers, and governmental agencies in Hong Kong and the People's Republic of China. The company operates in two segments, Trading and Manufacturing, and Engineering. It sells analytical instruments, such as spectrophotometers, colorimeters, chromatographs, mass spectrometers, flow injector analyzers, automated sample preparation workstations, and atomic spectrometers; environmental monitoring instruments comprising air and water quality monitoring instruments; sample pre-treatment equipment; and general-purpose laboratory instruments consisting of water quality monitoring and analysis equipment. The company also distributes general testing and measuring equipment comprising multi-channel digital and analogue recorders, signal amplifiers, and calibration equipment for energy conservation, renewable energy equipment, power quality analyzers, and continuous emissions monitoring systems; and air pollution control systems to power plants, railway and aero-space industries, utilities, educational institutions, and telecommunications companies. In addition, it offers process control systems, including sensors, temperature and pressure gauges, power and energy consumption meters, flow meters, valves, temperature and pressure transmitters and control devices, and temperature and pressure calibrators, as well as moisture, power, energy, and harmonic analyzers; systems engineering services; and maintenance, installation assistance, and calibration services. Further, the company distributes programmable logic controllers, telemetry units, and supervisory control and data acquisition systems and software. Euro Tech Holdings Company Limited was founded in 1971 and is headquartered in Hong Kong, Hong Kong.

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.