Is Energy Recovery, Inc. overvalued or undervalued?

As of 27 June 2025, Energy Recovery, Inc. has moved from a fair to an expensive valuation grade, indicating that the company is overvalued. The current P/E ratio stands at 31, which is higher than the industry average of approximately 30.31. Additionally, the EV to EBITDA ratio is 25.21, again exceeding the peer average of 24.27, while the PEG ratio is 1.03, suggesting that the stock may not be priced favorably relative to its growth prospects.
In comparison with peers, Helios Technologies, Inc. also appears expensive with a P/E of 29.32 and a significantly lower EV to EBITDA of 10.45. The notable return metrics indicate that Energy Recovery has underperformed against the S&P 500 over various periods, particularly with a year-to-date decline of 14.15% compared to the S&P's gain of 4.96%. Overall, the combination of high valuation ratios and poor relative performance suggests that Energy Recovery, Inc. is overvalued in the current market.