Is Energy Recovery, Inc. overvalued or undervalued?

As of 31 October 2025, the valuation grade for Energy Recovery, Inc. has moved from expensive to fair, indicating a shift in perception regarding its market value. The company appears to be fairly valued based on its current metrics, with a P/E ratio of 31, an EV to EBITDA of 25.21, and a PEG ratio of 1.03. In comparison, peers like Modine Manufacturing Co. have a higher P/E of 36.40, while Mueller Water Products, Inc. shows a lower P/E of 26.00, suggesting that Energy Recovery, Inc. is positioned reasonably within its industry.
Despite the fair valuation, the company has underperformed against the S&P 500 in the short term, with a one-week return of -5.52% compared to the S&P 500's 0.71%. Over the longer term, the stock has returned 76.57% over the past five years, but this is still significantly lower than the S&P 500's 109.18% return in the same period, indicating potential challenges ahead.