Analyzing Kadant (KAI) & Energy Recovery (NASDAQ:ERII)
Kadant (NYSE: KAI) and Energy Recovery (NASDAQ:ERII) are both small-cap industrial products companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitabiliy, institutional ownership, valuation, analyst recommendations, dividends, earnings and risk.
Kadant pays an annual dividend of $0.84 per share and has a dividend yield of 1.1%. Energy Recovery does not pay a dividend. Kadant pays out 27.5% of its earnings in the form of a dividend. Energy Recovery has increased its dividend for 3 consecutive years.
This is a breakdown of recent ratings and price targets for Kadant and Energy Recovery, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Kadant currently has a consensus price target of $72.00, indicating a potential downside of 6.68%. Energy Recovery has a consensus price target of $19.00, indicating a potential upside of 151.32%. Given Energy Recovery’s higher probable upside, analysts clearly believe Energy Recovery is more favorable than Kadant.
Insider & Institutional Ownership
90.5% of Kadant shares are held by institutional investors. Comparatively, 31.8% of Energy Recovery shares are held by institutional investors. 5.6% of Kadant shares are held by company insiders. Comparatively, 23.6% of Energy Recovery shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
This table compares Kadant and Energy Recovery’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk & Volatility
Kadant has a beta of 1.36, indicating that its stock price is 36% more volatile than the S&P 500. Comparatively, Energy Recovery has a beta of 5.54, indicating that its stock price is 454% more volatile than the S&P 500.
Earnings & Valuation
This table compares Kadant and Energy Recovery’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Kadant||$420.44 million||2.02||$65.08 million||$3.06||25.21|
|Energy Recovery||$56.93 million||7.17||$5.11 million||$0.05||151.23|
Kadant has higher revenue and earnings than Energy Recovery. Kadant is trading at a lower price-to-earnings ratio than Energy Recovery, indicating that it is currently the more affordable of the two stocks.
Kadant Inc. is a supplier of equipment and components used in process industries. In addition, the Company manufactures granules made from papermaking by-products. Its segments include Papermaking Systems and Wood Processing Systems. The Company has a customer base, which includes paper and oriented strand board (OSB) manufacturers. Papermaking Systems segment is engaged in developing, manufacturing, and marketing equipment for the global papermaking and paper recycling industries. Its Papermaking Systems segment consists of product lines, including Stock-Preparation; Doctoring, Cleaning, & Filtration, and Fluid-Handling. The Company develops, manufactures and markets stranders and related equipment used in the production of OSB.
About Energy Recovery
Energy Recovery, Inc. is an energy solutions provider to industrial fluid flow markets. The Company’s solutions convert wasted pressure energy into a reusable asset and preserve or eliminate pumping technology in hostile processing environments. Its segments include Water, Oil & Gas, and Corporate. The Water Segment focuses on products sold for use in reverse osmosis water desalination. The Oil & Gas Segment consists of products sold for use in hydraulic fracturing, gas processing, and chemical processing. The Company offers energy recovery devices (ERDs) in the water desalination market with its pressure exchanger (PX) and turbocharger technologies. The Company offers VorTeq hydraulic fracturing system, IsoBoost, and IsoGen product lines to the oil and gas market. The Company’s customers include engineering, procurement and construction companies, original equipment manufacturers, international oil companies, national oil companies, and exploration and production companies.
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