Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Energy Recovery (Nasdaq: ERII) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Machinery industry. The net income has significantly decreased by 111.7% when compared to the same quarter one year ago, falling from -$1.83 million to -$3.87 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Machinery industry and the overall market, ENERGY RECOVERY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- ERII, with its very weak revenue results, has greatly underperformed against the industry average of 19.7%. Since the same quarter one year prior, revenues plummeted by 53.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- ENERGY RECOVERY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ENERGY RECOVERY INC continued to lose money by earning -$0.16 versus -$0.50 in the prior year. This year, the market expects an improvement in earnings (-$0.06 versus -$0.16).
- The gross profit margin for ENERGY RECOVERY INC is currently very high, coming in at 74.86%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -79.41% is in-line with the industry average.