L.B. Foster (NASDAQ:FSTR – Get Free Report) and Energy Recovery (NASDAQ:ERII – Get Free Report) are both small-cap industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.
Profitability
This table compares L.B. Foster and Energy Recovery’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| L.B. Foster | 2.35% | 8.83% | 4.79% |
| Energy Recovery | 5.15% | 2.82% | 2.48% |
Valuation and Earnings
This table compares L.B. Foster and Energy Recovery”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| L.B. Foster | $540.01 million | 0.77 | $7.55 million | $1.29 | 30.81 |
| Energy Recovery | $134.99 million | 2.73 | $22.96 million | $0.09 | 79.44 |
Energy Recovery has lower revenue, but higher earnings than L.B. Foster. L.B. Foster is trading at a lower price-to-earnings ratio than Energy Recovery, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
L.B. Foster has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500. Comparatively, Energy Recovery has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.
Analyst Recommendations
This is a summary of current recommendations and price targets for L.B. Foster and Energy Recovery, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| L.B. Foster | 0 | 3 | 1 | 0 | 2.25 |
| Energy Recovery | 2 | 3 | 0 | 0 | 1.60 |
L.B. Foster currently has a consensus target price of $32.00, suggesting a potential downside of 19.50%. Energy Recovery has a consensus target price of $11.67, suggesting a potential upside of 63.17%. Given Energy Recovery’s higher possible upside, analysts plainly believe Energy Recovery is more favorable than L.B. Foster.
Insider and Institutional Ownership
80.6% of L.B. Foster shares are held by institutional investors. Comparatively, 83.6% of Energy Recovery shares are held by institutional investors. 7.6% of L.B. Foster shares are held by company insiders. Comparatively, 2.5% of Energy Recovery shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Summary
L.B. Foster beats Energy Recovery on 8 of the 14 factors compared between the two stocks.
About L.B. Foster
L.B. Foster Company provides engineered and manufactured products and services for the building and infrastructure projects in the United States, Canada, the United Kingdom, and internationally. It operates through two segments: Rail, Technologies, and Services; and Infrastructure Solutions. The Rail, Technologies, and Services segment offers new rail to passenger and short line freight railroads, industrial companies, and rail contractors, as well as used rails; rail accessories, such as rack spikes, bolts, angle bars, tie plates, and other products; insulated rail joints and related accessories; fixation fasteners, coverboards, and special accessories; and trackwork products. This segment also provides engineered concrete railroad ties, friction management products and application systems, railroad condition monitoring systems and equipment including wheel impact load detection systems, wayside data collection and management systems, and rockfall, flood, earthworks, and bridge strike monitoring; and aftermarket services. The Infrastructure Solutions segment manufactures precast concrete products for use as restrooms, concession stands, and protective storage buildings under the CXT brand for national, state, and municipal parks; and manufactures sounds walls, bridge beams, box culverts, septic tanks, and other custom pre-stressed and precast concrete products. This segment also provides steel bridge products; corrosion protection solutions; concrete-reinforced steel grid decking, open steel grid deck, aluminum bridge railing, and stay-in-place steel bridge forms; cuts, threads, and paints pipe; threading services for water well applications; protective pipeline coating services; and turnkey solutions for metering and injection systems for oil and gas markets. L.B. Foster Company was founded in 1902 and is headquartered in Pittsburgh, Pennsylvania.
About Energy Recovery
Energy Recovery, Inc., together with its subsidiaries, designs, manufactures, and sells energy efficiency technology solutions in the Americas, the Middle East, Africa, Asia, and Europe. The company operates through Water and Emerging Technologies segments. The company offers high and low pressure, and ultra pressure exchangers; AT and LPT hydraulic turbochargers; and high-pressure feed and circulation booster pumps for use in seawater and brackish desalination, and wastewater treatment. It also provides PX G1300, which reduces energy consumption and operating costs of carbon dioxide-based refrigeration systems; and spare parts, as well as repair, field, and commissioning services. It sells its products under the ERI, PX, Pressure Exchanger, PX Pressure Exchanger, Ultra PX, PX G, PX G1300, PX PowerTrain, AT, and Aquabold brands to original equipment manufacturers, supermarket chains, cold storage facilities, refrigeration system installers, and other industrial users; aftermarket customers consisting of desalination plant owners and operators; and project developers, end-users, and industry consultants, as well as engineering, procurement, and construction firms. Energy Recovery, Inc. was incorporated in 1992 and is headquartered in San Leandro, California.
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