It was reported on October 30, that Farshad Ghasripoor, Chief Technology Officer at Energy Recovery ERII executed a significant insider sell, according to an SEC filing.

What Happened: Ghasripoor’s recent move involves selling 10,526 shares of Energy Recovery. This information is documented in a Form 4 filing with the U.S. Securities and Exchange Commission on Wednesday. The total value is $189,120.

Tracking the Thursday’s morning session, Energy Recovery shares are trading at $17.58, showing a down of 0.0%.

About Energy Recovery

Energy Recovery Inc is an engineering-driven technology company. It is engaged in engineering, designing, manufacturing and supplying solutions that make industrial processes more efficient and sustainable. The company operates in three segments, Water, Emerging Technologies and Corporate. It offers energy recovery devices (ERDs) and pumps as well as related products and services to the global reverse osmosis desalination market. The company derives a majority of the revenue from the Water segment. Geographically, the company operates in the U.S. and other international countries.

Energy Recovery’s Financial Performance

Revenue Growth: Over the 3 months period, Energy Recovery showcased positive performance, achieving a revenue growth rate of 31.25% as of 30 June, 2024. This reflects a substantial increase in the company’s top-line earnings. As compared to its peers, the company achieved a growth rate higher than the average among peers in Industrials sector.

Profitability Metrics: Unlocking Value

• Gross Margin: With a high gross margin of 64.58%, the company demonstrates effective cost control and strong profitability relative to its peers.

• Earnings per Share (EPS): Energy Recovery’s EPS lags behind the industry average, indicating concerns and potential challenges with a current EPS of -0.01.

Debt Management: With a below-average debt-to-equity ratio of 0.06, Energy Recovery adopts a prudent financial strategy, indicating a balanced approach to debt management.

Insights into Valuation Metrics:

• Price to Earnings (P/E) Ratio: Energy Recovery’s current Price to Earnings (P/E) ratio of 50.97 is higher than the industry average, indicating that the stock may be overvalued according to market sentiment.

• Price to Sales (P/S) Ratio: With a higher-than-average P/S ratio of 7.78, Energy Recovery’s stock is perceived as being overvalued in the market, particularly in relation to sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With an impressive EV/EBITDA ratio of 41.59, Energy Recovery demonstrates exemplary market valuation, surpassing industry averages.

Market Capitalization Analysis: Reflecting a smaller scale, the company’s market capitalization is positioned below industry averages. This could be attributed to factors such as growth expectations or operational capacity.

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The Importance of Insider Transactions

Insider transactions are not the sole determinant of investment choices, but they are a factor worth considering.

In the context of legal matters, the term “insider” refers to any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities, as outlined by Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and significant hedge funds. Such insiders are obligated to report their transactions through a Form 4 filing, which must be completed within two business days of the transaction.

Pointing towards optimism, a company insider’s new purchase signals their positive anticipation for the stock to rise.

Despite insider sells not always signaling a bearish sentiment, they can be driven by various factors.

A Closer Look at Important Transaction Codes

Digging into the details of stock transactions, investors frequently turn their attention to those taking place in the open market, as outlined in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Energy Recovery’s Insider Trades.

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This article was generated by Benzinga’s automated content engine and reviewed by an editor.