Energy Recovery, Inc. (ERII) vs Zone Frontier Inc. (ZONE)

Energy Recovery, Inc. and Zone Frontier Inc. are both Pollution & Treatment Controls companies. Energy Recovery, Inc. is the larger, with a market value of $338.9M against $60.6M — 5.6× the size. Zone Frontier Inc. has negative trailing earnings, so its P/E is not meaningful; Energy Recovery, Inc. trades at 22.9×. Zone Frontier Inc. grew revenue faster over the last twelve months: 64.3% against −15.0%. Energy Recovery, Inc. has the higher net margin (12.7% vs −5,112.6%) and the higher return on invested capital (11.2% vs −100.4%). Across the 16 metrics below, Energy Recovery, Inc. leads on 12 and Zone Frontier Inc. on 4.

Valuation

Metric ERII ZONE Pollution & Treatment Controls median
P/E 22.93 n/m —
P/S 2.84 4.41 2.78
P/B 1.98 0.29 1.98
Price to free cash flow 8.86 n/m —
EV/EBITDA 14.65 n/m 18.09
EV/Sales 2.17 1.02 2.17
Earnings yield 4.36% (1,117.33%) (22.91%)
Free cash flow yield 11.28% (987.00%) (7.86%)

Profitability

Metric ERII ZONE Pollution & Treatment Controls median
Gross margin 64.01% 37.81% 34.98%
Operating margin 11.81% (1,702.00%) (29.01%)
Net margin 12.72% (5,112.61%) (31.94%)
Free cash flow margin 32.02% (4,357.33%) (12.20%)
Return on equity 8.58% (657.47%) (38.24%)
Return on assets 7.48% (571.26%) (26.06%)
Return on invested capital 11.20% (100.44%) 0.00%

Growth

Metric ERII ZONE Pollution & Treatment Controls median
Revenue growth (TTM) (14.95%) 64.33% 9.79%
EPS growth (last fiscal year) 5.00% (31.94%) 13.10%
Revenue growth, 5-year CAGR 2.56% — 8.56%
Net income growth, 5-year CAGR (2.74%) — 0.00%

Health

Metric ERII ZONE Pollution & Treatment Controls median
Debt to equity 0.00 0.00 0.03
Current ratio 8.05 21.24 1.90
Net debt to EBITDA (2.75) 0.29 0.38

Dividend

Metric ERII ZONE Pollution & Treatment Controls median
Dividend yield — — —
Payout ratio — — —

Size

Metric ERII ZONE Pollution & Treatment Controls median
Market cap 338.94m 60.56m 44.11m

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