Energy Recovery (NASDAQ: ERII) and Sharps Compliance (NASDAQ:SMED) 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 profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Earnings & Valuation

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This table compares Energy Recovery and Sharps Compliance’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Energy Recovery $63.16 million 7.39 $12.35 million $0.22 39.27
Sharps Compliance $38.19 million 1.94 -$1.29 million $0.01 460.46

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

Institutional and Insider Ownership

36.1% of Energy Recovery shares are held by institutional investors. Comparatively, 24.1% of Sharps Compliance shares are held by institutional investors. 23.6% of Energy Recovery shares are held by insiders. Comparatively, 20.4% of Sharps Compliance shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Energy Recovery 0 0 6 0 3.00
Sharps Compliance 0 0 2 0 3.00

Energy Recovery currently has a consensus price target of $15.83, indicating a potential upside of 83.26%. Sharps Compliance has a consensus price target of $7.00, indicating a potential upside of 52.17%. Given Energy Recovery’s higher probable upside, research analysts plainly believe Energy Recovery is more favorable than Sharps Compliance.

Risk and Volatility

Energy Recovery has a beta of 5.35, meaning that its share price is 435% more volatile than the S&P 500. Comparatively, Sharps Compliance has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Energy Recovery 22.39% 5.62% 2.65%
Sharps Compliance 0.33% 0.54% 0.39%

Summary

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

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.

About Sharps Compliance

Sharps Compliance Corp. is a provider of waste management services, including medical, pharmaceutical and hazardous. The Company’s solutions include Sharps Recovery System, TakeAway Medication Recovery System, MedSafe, Route-Based Pickup Service, TakeAway Recycle System, ComplianceTRAC, Universal Waste Shipback Systems and Other Solutions. The Company’s solutions facilitate the collection, containment, transportation and treatment of various types of healthcare-related materials, including hypodermic needles, lancets and other devices or objects used to puncture or lacerate the skin, or sharps, hazardous waste and unused consumer dispensed medications and over-the-counter drugs. It assists its customers in determining which of its solution offerings fit for the collection, containment, return transportation and treatment of medical waste, used healthcare materials, pharmaceutical waste, hazardous waste and unused dispensed medications. It provides tracking and reporting tools.

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