Financial Comparison: Energy Recovery (ERII) vs. MagneGas (MNGA)

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

Analyst Ratings

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This is a summary of recent ratings and recommmendations for MagneGas and Energy Recovery, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MagneGas 0 0 1 0 3.00
Energy Recovery 0 0 6 0 3.00

MagneGas presently has a consensus price target of $6.00, indicating a potential upside of 614.29%. Energy Recovery has a consensus price target of $15.83, indicating a potential upside of 95.23%. Given MagneGas’ higher possible upside, research analysts clearly believe MagneGas is more favorable than Energy Recovery.

Insider & Institutional Ownership

40.5% of MagneGas shares are owned by institutional investors. Comparatively, 36.1% of Energy Recovery shares are owned by institutional investors. 4.5% of MagneGas shares are owned by company insiders. Comparatively, 23.6% of Energy Recovery shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares MagneGas and Energy Recovery’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MagneGas $3.55 million 0.41 -$17.46 million ($44.98) -0.02
Energy Recovery $63.16 million 6.93 $12.35 million $0.07 115.86

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

Volatility and Risk

MagneGas has a beta of -0.35, suggesting that its share price is 135% less volatile than the S&P 500. Comparatively, Energy Recovery has a beta of 5.3, suggesting that its share price is 430% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
MagneGas -371.23% -277.02% -126.92%
Energy Recovery 22.39% 5.62% 2.65%

Summary

Energy Recovery beats MagneGas on 11 of the 13 factors compared between the two stocks.

MagneGas Company Profile

MagneGas Corporation, an alternative energy company, creates and produces hydrogen based alternative fuel through the gasification of liquid and liquid waste in the United States and internationally. The company produces gas bottled in cylinders and distributes to the metalworking market as an alternative to acetylene. It offers MagneGas2, a hydrogen based fuel for metal cutting; and MagneTote, a metal cutting torch system primarily used in the firefighting industry. It also provides Plasma Arc Flow refineries, which are machines that produce MagneGas2. In addition, the company sells and licenses the plasma arc technology for the processing of liquid waste. The company was founded in 2007 and is headquartered in Clearwater, Florida.

Energy Recovery Company Profile

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.

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