DCF Tool

ERII

Energy Recovery Inc – Iron and Steel Forging
Energy Recovery creates technologies that solve complex challenges for industrial fluid-flow markets worldwide. Building on its pressure exchanger technology platform, the Company designs and manufactures solutions that make industrial processes more efficient and sustainable. What began as a game-changing invention for desalination has grown into a global business advancing the environmental sustainability of customers' operations in multiple industries. Headquartered in the San Francisco Bay Area, Energy Recovery has manufacturing, research and development facilities across California and Texas with sales and on-site technical support available globally.
Analysis Results
Intrinsic Value $54.30
Latest Price $23.01
Relative Value 58% 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 63.6%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 9.6%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 63.6%, 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)
2022 45.1 41.2
2023 73.8 61.4
2024 121 91.7
2025 198 137
2026 323 204
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 4330 million. This corresponds to a present value of 2490 million.

Intrinsic Value Per Share

The total present value of the projected cash flows is 535 million. Adding in the terminal value gives a total present value of 3030 million.

There are presently 55.8 million outstanding shares, so the intrinsic value per share is 54.3.

Financial Statements

The following data was to determine the past cash flows.

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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