Energy Recovery (NASDAQ: ERII) and IHI (OTCMKTS:IHICY) are both industrial products companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Institutional and Insider Ownership

36.0% of Energy Recovery shares are owned by institutional investors. 23.6% of Energy Recovery shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Energy Recovery and IHI’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Energy Recovery $63.16 million 7.27 $12.35 million $0.07 121.57
IHI $13.75 billion 0.39 $48.79 million $0.14 61.50

IHI has higher revenue and earnings than Energy Recovery. IHI is trading at a lower price-to-earnings ratio than Energy Recovery, indicating that it is currently the more affordable of the two stocks.

Dividends

IHI pays an annual dividend of $0.08 per share and has a dividend yield of 0.9%. Energy Recovery does not pay a dividend. IHI pays out 57.1% of its earnings in the form of a dividend.

Profitability

This table compares Energy Recovery and IHI’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Energy Recovery 22.39% 5.62% 2.65%
IHI 1.60% 9.30% 1.87%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Energy Recovery and IHI, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Energy Recovery 0 0 6 0 3.00
IHI 0 0 0 0 N/A

Energy Recovery presently has a consensus target price of $15.83, suggesting a potential upside of 86.06%. Given Energy Recovery’s higher possible upside, equities research analysts clearly believe Energy Recovery is more favorable than IHI.

Summary

Energy Recovery beats IHI on 9 of the 14 factors compared between the two stocks.

About Energy Recovery

Energy Recovery, Inc. provides energy solutions to industrial fluid flow markets under the ERI, PX, Pressure Exchanger, PX Pressure Exchanger, AT, AquaBold, VorTeq, MTeq, IsoBoost, and IsoGen names worldwide. The company operates through Water and Oil & Gas segments. It offers pressure exchanger energy recovery devices for water desalination plants; hydraulic turbochargers for low-pressure brackish, high-pressure seawater reverse osmosis systems, and other water treatment applications; and high-pressure and circulation pumps for low and high-pressure reverse osmosis systems. The company also provides VorTeq solutions for hydraulic fracturing applications; MTeq solutions for mud pumping applications; IsoBoost systems, such as hydraulic turbo chargers, and related controls and automation systems; and IsoGen systems, including hydraulic turbines, and related controls and automation systems. It serves engineering, procurement, and construction (EPC) firms that design and build large desalination plants; original equipment manufacturers; oil companies; exploration and production companies; oilfield service companies; and EPC firms, which design and build oil and gas processing plants. The company markets its products through its direct sales channels and independent sales agents. Energy Recovery, Inc. was founded in 1992 and is headquartered in San Leandro, California.

About IHI

IHI Corporation, together with its subsidiaries, manufactures and sells machinery and equipment in Japan, the Americas, Europe, the Asia Pacific, and internationally. It offers boilers, components for nuclear power plants, facilities for nuclear fuel cycle plants, gas turbine/diesel engines/gas engines, environment responsive systems, and lithium-ion batteries. The company also provides LNG receiving terminals and storage tanks; equipment for plants and reactors; and engineering, procurement, construction, and start-up services for process and pharmaceutical plants. In addition, it offers bridges, water gates, and steel structures; shield tunneling machines, concrete construction materials, automated people movers, light rail transit, and other products; and security and environmental monitoring systems, as well as constructs and refurbishes offshore units and marine structures. Further, the company provides air and process gas compressors, separators, dehydrators, filters, and cryogenic products; turbochargers for vehicles and ships; parking and logistics systems, materials handling equipment, and construction machinery; steelmaking equipment, such as industrial furnaces and stepping cylinders; thermal and surface treatment equipment, factory automation systems, slitters, rubber and film calender lines, pulp and paper machinery, lubricating systems, and grid scale energy storage systems; and agricultural machines, motors, and lawn mowers. Additionally, it offers aero engines and air traffic control systems; and rockets, rocket and satellite propulsion systems, systems for satellites, space station-related equipment, ground test facilities, sample containers, etc., as well as engage in real estate rental and sales business. The company was formerly known as Ishikawajima-Harima Heavy Industries Co., Ltd. and changed its name to IHI Corporation in 2007. IHI Corporation was founded in 1853 and is headquartered in Tokyo, Japan.

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