Energy Recovery, Inc. — Earnings Quality Grade D
ERII · Industrials
Significant concerns
Screening Summary
Management Signals
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO surged by 46 days (161 → 207)
Small-cap context: DSO swings on a small revenue base are more often quarterly customer-mix effects than red flags.
AR outpaced revenue for 2 consecutive years
Revenue -6.9%, CFFO -8.5%. Cash follows revenue
Expense Quality
Inventory -2.6% vs COGS -2.0%. Normal
CapEx growth 2.5% vs revenue -6.9%. Normal
SG&A/Gross Profit = 57.7%. Normal
Gross margin 65.1%, change -1.7pp. Stable
Cash Flow Quality
CFFO/NI = 0.82. Profits backed by cash
FCF $0.0B, FCF/NI = 0.76
Accruals ratio = 1.8%. Low accruals
Cash $0.1B covers debt $0.0B
Balance Sheet Health
Goodwill+Intangibles $0.0B = 6% of equity. Manageable
Debt/EBITDA = 0.3x. Healthy
Other assets grew 47.6% vs revenue -6.9%
No write-off data
Acquisition Risk
FCF after acquisitions positive
Goodwill+Intangibles change 0% YoY. Normal
Manipulation Score
M-Score = -2.23 (< -2.22). Unlikely manipulator
Portfolio monitoring
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Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-25