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 $353.2M against $30.5M — 11.6× the size. Zone Frontier Inc. has negative trailing earnings, so its P/E is not meaningful; Energy Recovery, Inc. trades at 23.5×. Zone Frontier Inc. grew revenue faster over the last twelve months: 80.7% against −15.0%. Energy Recovery, Inc. has the higher net margin (12.7% vs −4,664.5%) and the higher return on invested capital (11.2% vs −74.8%). Across the 16 metrics below, Energy Recovery, Inc. leads on 14 and Zone Frontier Inc. on 2.

Valuation

Metric ERII ZONE Pollution & Treatment Controls median
P/E 23.48 n/m —
P/S 2.91 8.23 3.64
P/B 2.03 0.47 2.08
Price to free cash flow 9.08 n/m —
EV/EBITDA 15.16 n/m 17.68
EV/Sales 2.25 4.37 4.26
Earnings yield 4.26% (1,230.77%) (18.01%)
Free cash flow yield 11.02% (53.32%) (5.86%)

Profitability

Metric ERII ZONE Pollution & Treatment Controls median
Gross margin 64.01% 37.31% 34.73%
Operating margin 11.81% (1,519.70%) (29.01%)
Net margin 12.72% (4,664.52%) (31.94%)
Free cash flow margin 32.02% (439.09%) (12.20%)
Return on equity 8.58% (513.26%) (38.24%)
Return on assets 7.48% (431.22%) (26.06%)
Return on invested capital 11.20% (74.83%) 0.00%

Growth

Metric ERII ZONE Pollution & Treatment Controls median
Revenue growth (TTM) (14.95%) 80.71% 9.79%
EPS growth (last fiscal year) 5.00% (61.22%) —
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 2.94 1.90
Net debt to EBITDA (2.75) (0.41) 0.30

Dividend

Metric ERII ZONE Pollution & Treatment Controls median
Dividend yield — — —
Payout ratio 0.00 — 0.00

Size

Metric ERII ZONE Pollution & Treatment Controls median
Market cap 353.23m 30.54m 48.08m

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