Lydall (NYSE: LDL) and Energy Recovery (NASDAQ:ERII) are both small-cap multi-sector conglomerates companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, profitability, analyst recommendations, institutional ownership, earnings, valuation and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Lydall 6.56% 17.43% 9.51%
Energy Recovery 3.07% 2.43% 1.07%

Valuation & Earnings

This table compares Lydall and Energy Recovery’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lydall $640.28 million 1.23 $92.46 million $2.45 18.65
Energy Recovery $55.87 million 6.95 $3.95 million $0.03 241.75

Lydall has higher revenue and earnings than Energy Recovery. Lydall is trading at a lower price-to-earnings ratio than Energy Recovery, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and recommmendations for Lydall and Energy Recovery, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lydall 0 0 1 0 3.00
Energy Recovery 0 0 7 0 3.00

Lydall presently has a consensus price target of $63.00, suggesting a potential upside of 37.86%. Energy Recovery has a consensus price target of $17.33, suggesting a potential upside of 139.08%. Given Energy Recovery’s higher probable upside, analysts clearly believe Energy Recovery is more favorable than Lydall.

Volatility and Risk

Lydall has a beta of 1.71, indicating that its share price is 71% more volatile than the S&P 500. Comparatively, Energy Recovery has a beta of 5.54, indicating that its share price is 454% more volatile than the S&P 500.

Institutional and Insider Ownership

89.1% of Lydall shares are owned by institutional investors. Comparatively, 33.7% of Energy Recovery shares are owned by institutional investors. 5.0% of Lydall shares are owned by company insiders. Comparatively, 23.6% of Energy Recovery shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Lydall beats Energy Recovery on 7 of the 13 factors compared between the two stocks.

Lydall Company Profile

Lydall, Inc. designs and manufactures specialty engineered filtration media, industrial thermal insulating solutions, automotive thermal and acoustical barriers for filtration/separation and thermal/acoustical applications. The Company’s segments are Performance Materials, Technical Nonwovens, Thermal/Acoustical Metals and Thermal/Acoustical Fibers. The Performance Materials segment includes filtration, thermal insulation and life sciences filtration businesses. The Technical Nonwovens segment includes its industrial filtration and advanced materials products. The Thermal/Acoustical Metals segment includes its metal parts and related tooling used in automotive applications. The Thermal/Acoustical Fibers segment includes its fiber parts business and related tooling used in automotive applications. Its Filtration products include LydAir MG (Micro-Glass) Air Filtration Media, LydAir MB (Melt Blown) Air Filtration Media and Arioso Membrane Composite Media.

Energy Recovery Company Profile

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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