Energy Recovery, Inc. (NASDAQ:ERII) shareholders have seen the share price descend 13% over the month. But that doesn’t change the fact that the returns over the last five years have been respectable. It’s good to see the share price is up 74% in that time, better than its market return of 62%.
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
During the last half decade, Energy Recovery became profitable. That’s generally thought to be a genuine positive, so we would expect to see an increasing share price.
The image below shows how EPS has tracked over time.
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Energy Recovery’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Energy Recovery shareholders are up 4.3% for the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 12% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. Before spending more time on Energy Recovery it might be wise to click here to see if insiders have been buying or selling shares.
Of course Energy Recovery may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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