Energy Recovery (NASDAQ:ERII) versus OriginClear (OTCMKTS:OCLN) Critical Review

OriginClear (OTCMKTS:OCLN) 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 valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Institutional and Insider Ownership

83.6% of Energy Recovery shares are owned by institutional investors. 0.4% of OriginClear shares are owned by insiders. Comparatively, 4.1% of Energy Recovery shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
OriginClear	-998.01%	N/A	-11.62%
Energy Recovery	14.35%	8.90%	7.84%

Volatility and Risk

OriginClear has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, Energy Recovery has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for OriginClear and Energy Recovery, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OriginClear	0	0	0	0	0.00
Energy Recovery	0	1	3	2	3.17

Energy Recovery has a consensus target price of $20.75, suggesting a potential upside of 37.78%. Given Energy Recovery’s stronger consensus rating and higher probable upside, analysts clearly believe Energy Recovery is more favorable than OriginClear.

Earnings & Valuation

This table compares OriginClear and Energy Recovery”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OriginClear	$30,000.00	145.65	-$11.63 million	N/A	N/A
Energy Recovery	$135.06 million	6.46	$21.50 million	$0.34	44.29

Energy Recovery has higher revenue and earnings than OriginClear.

Summary

Energy Recovery beats OriginClear on 12 of the 13 factors compared between the two stocks.

About OriginClear

OriginClear, Inc. provides water treatment solutions worldwide. The company designs and manufactures a line of water treatment systems for municipal, industrial, and pure water applications. It also offers a range of services, including maintenance contracts, retrofits, and replacement assistance; and rents equipment through contracts of varying duration, as well as provides prefabricated water transport and treatment systems. The company was formerly known as OriginOil, Inc. and changed its name to OriginClear, Inc. in April 2015. OriginClear, Inc. was incorporated in 2007 and is headquartered in Clearwater, Florida.

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.