DCF Tool

ERII

Energy Recovery Inc – Iron and Steel Forging
energy recovery (nasdaq:erii) recycles and converts wasted pressure energy into a usable asset and preserves pumps that are subject to hostile processing environments. with award winning technology, energy recovery simplifies complex industrial systems while improving productivity, profitability, and efficiency within the oil & gas, chemical processing, and water industries. energy recovery products save clients more than $1.5 billion (usd) annually. headquartered in the bay area, energy recovery has offices in ireland, shanghai, and dubai. for more information about the company, please visit our website at www.energyrecovery.com.
Analysis Results
Intrinsic Value $264.34
Latest Price $18.88
Relative Value 93% undervalued
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Cash Flow (Millions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 65.1%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 4.3%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 65.1%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (million) Present value (million)
2023 79.4 76.1
2024 131 121
2025 216 191
2026 357 302
2027 590 479
Terminal Value

Assuming the company was sold after the projection period at an exit multiple of 30, the terminal value of the company would be 17700 million. This corresponds to a present value of 13800 million.

Intrinsic Value Per Share

The total present value of the projected cash flows is 1170 million. Adding in the terminal value gives a total present value of 14900 million.

There are presently 56.5 million outstanding shares, so the intrinsic value per share is 264.34.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 157,867,000
Current Cash 89,833,000
Current Liabilities 18,302,000
Current Debt 0
Non-Cash Working Capital (NCWC) 49,732,000
Change in NCWC 23,444,000
EBIT 24,829,000
Tax Provision 2,022,000
Depreciation and Amortization 6,302,000
Capital Expenditure -4,232,000
Unlevered Free Cash Flow 48,417,326
Current Assets 151,763,000
Current Cash 105,690,000
Current Liabilities 19,785,000
Current Debt 0
Non-Cash Working Capital (NCWC) 26,288,000
Change in NCWC 13,527,000
EBIT 13,831,000
Tax Provision -265,000
Depreciation and Amortization 5,939,000
Capital Expenditure -6,679,000
Unlevered Free Cash Flow 26,618,000
Current Assets 143,191,000
Current Cash 114,701,000
Current Liabilities 15,729,000
Current Debt 0
Non-Cash Working Capital (NCWC) 12,761,000
Change in NCWC 12,747,000
EBIT 33,626,000
Tax Provision 5,746,000
Depreciation and Amortization 5,299,000
Capital Expenditure -6,785,000
Unlevered Free Cash Flow 38,874,022
Current Assets 112,967,000
Current Cash 85,123,000
Current Liabilities 27,830,000
Current Debt 0
Non-Cash Working Capital (NCWC) 14,000
Change in NCWC 2,791,000
EBIT 10,364,000
Tax Provision 1,343,000
Depreciation and Amortization 4,395,000
Capital Expenditure -7,382,000
Unlevered Free Cash Flow 9,032,323
Current Assets 119,648,000
Current Cash 95,293,000
Current Liabilities 27,132,000
Current Debt 0
Non-Cash Working Capital (NCWC) -2,777,000
Change in NCWC -11,351,000
EBIT 9,978,000
Tax Provision -10,653,000
Depreciation and Amortization 3,869,000
Capital Expenditure -5,235,000
Unlevered Free Cash Flow -2,739,000
Current Assets 126,196,000
Current Cash 97,800,000
Current Liabilities 19,833,000
Current Debt 11,000
Non-Cash Working Capital (NCWC) 8,574,000
Change in NCWC 3,789,000
EBIT 3,276,000
Tax Provision -8,394,000
Depreciation and Amortization 3,666,000
Capital Expenditure -7,376,000
Unlevered Free Cash Flow 3,355,000
Current Assets 122,369,000
Current Cash 100,437,000
Current Liabilities 17,158,000
Current Debt 11,000
Non-Cash Working Capital (NCWC) 4,785,000
Change in NCWC -2,544,000
EBIT 357,000
Tax Provision -390,000
Depreciation and Amortization 3,680,000
Capital Expenditure -1,112,000
Unlevered Free Cash Flow 381,000
Current Assets 123,531,000
Current Cash 100,188,000
Current Liabilities 16,024,000
Current Debt 10,000
Non-Cash Working Capital (NCWC) 7,329,000
Change in NCWC -5,817,000
EBIT -11,791,000
Tax Provision -334,000
Depreciation and Amortization 3,838,000
Capital Expenditure -572,000
Unlevered Free Cash Flow -14,342,000
Current Assets 53,241,000
Current Cash 28,573,000
Current Liabilities 11,522,000
Current Debt 0
Non-Cash Working Capital (NCWC) 13,146,000
Change in NCWC -7,818,000
EBIT -18,483,000
Tax Provision 291,000
Depreciation and Amortization 4,028,000
Capital Expenditure -2,562,000
Unlevered Free Cash Flow -24,835,000
Current Assets 51,873,000
Current Cash 20,227,000
Current Liabilities 10,682,000
Current Debt 0
Non-Cash Working Capital (NCWC) 20,964,000
Change in NCWC -918,000
EBIT -2,704,000
Tax Provision 327,000
Depreciation and Amortization 3,797,000
Capital Expenditure -1,132,000
Unlevered Free Cash Flow -957,000
Current Assets 60,859,000
Current Cash 26,139,000
Current Liabilities 12,856,000
Current Debt 18,000
Non-Cash Working Capital (NCWC) 21,882,000
Change in NCWC 5,137,000
EBIT -8,039,000
Tax Provision -262,000
Depreciation and Amortization 3,802,000
Capital Expenditure -2,810,000
Unlevered Free Cash Flow -1,910,000

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