Head to Head Comparison: Energy Recovery (ERII) and Casella Waste Systems (CWST)

Energy Recovery (NASDAQ: ERII) and Casella Waste Systems (NASDAQ:CWST) are both small-cap industrial products companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, risk, valuation and profitability.

Insider & Institutional Ownership

36.1% of Energy Recovery shares are owned by institutional investors. Comparatively, 81.2% of Casella Waste Systems shares are owned by institutional investors. 23.6% of Energy Recovery shares are owned by company insiders. Comparatively, 11.5% of Casella Waste Systems shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Energy Recovery and Casella Waste Systems’ 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%
Casella Waste Systems -3.64% -58.61% 4.76%

Valuation and Earnings

This table compares Energy Recovery and Casella Waste Systems’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Energy Recovery $63.16 million 7.12 $12.35 million $0.22 37.87
Casella Waste Systems $599.31 million 1.66 -$21.79 million ($0.55) -42.75

Energy Recovery has higher earnings, but lower revenue than Casella Waste Systems. Casella Waste Systems 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 and Volatility

Energy Recovery has a beta of 5.35, indicating that its share price is 435% more volatile than the S&P 500. Comparatively, Casella Waste Systems has a beta of 0.79, indicating that its share price is 21% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Energy Recovery and Casella Waste Systems, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Energy Recovery 0 0 6 0 3.00
Casella Waste Systems 0 0 3 0 3.00

Energy Recovery currently has a consensus target price of $15.83, suggesting a potential upside of 90.08%. Casella Waste Systems has a consensus target price of $21.33, suggesting a potential downside of 9.26%. Given Energy Recovery’s higher possible upside, equities research analysts clearly believe Energy Recovery is more favorable than Casella Waste Systems.

Summary

Energy Recovery beats Casella Waste Systems on 10 of the 13 factors compared between the two stocks.

Energy Recovery Company Profile

Energy Recovery, Inc. is an energy solutions provider to industrial fluid flow markets. The Company’s solutions convert wasted pressure energy into a reusable asset and preserve or eliminate pumping technology in hostile processing environments. Its segments include Water, Oil & Gas, and Corporate. The Water Segment focuses on products sold for use in reverse osmosis water desalination. The Oil & Gas Segment consists of products sold for use in hydraulic fracturing, gas processing, and chemical processing. The Company offers energy recovery devices (ERDs) in the water desalination market with its pressure exchanger (PX) and turbocharger technologies. The Company offers VorTeq hydraulic fracturing system, IsoBoost, and IsoGen product lines to the oil and gas market. The Company’s customers include engineering, procurement and construction companies, original equipment manufacturers, international oil companies, national oil companies, and exploration and production companies.

Casella Waste Systems Company Profile

Casella Waste Systems, Inc., together with its subsidiaries, operates as a vertically-integrated solid waste services company in the northeastern United States. The company operates through Eastern Region, Western Region, Recycling, and Other segments. It offers resource management services primarily in the areas of solid waste collection and disposal, transfer, recycling, and organics services to residential, commercial, municipal, and industrial customers. The company provides a range of non-hazardous solid waste services, including collections, transfer stations, material recovery facilities, and disposal facilities. It also processes and markets recyclable metals, aluminum, plastics, and paper and corrugated cardboard, as well as recyclables purchased from third-parties. In addition, the company is involved in commodity brokerage operations. As of January 31, 2018, it owned and/or operated 32 solid waste collection operations, 47 transfer stations, 18 recycling facilities, 9 Subtitle D landfills, 4 landfill gas-to-energy facilities, and 1 landfill permitted to accept construction and demolition materials. Casella Waste Systems, Inc. was founded in 1975 and is headquartered in Rutland, Vermont.

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