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DCF Valuation
Base-case fair value
$20.64
Intrinsic $27.52 · 25% MOS
Current price: $8.99
Base-case summary
Our base-case DCF for Energy Recovery, Inc. (ERII) projects 10 years of free cash flow growth at 20.0% for years 1–5 and 10.0% for years 6–10, anchored to 31.8% historical FCF growth, then applies a 2.5% perpetual growth rate and a 8.0% discount rate. Starting from $27M in trailing free cash flow, this produces an intrinsic value of $27.52 per share. A 25% safety margin gives a fair value of $20.64, suggesting the stock is currently 130% undervalued against the $8.99 market price.
See 3 scenarios side by side
Conservative, Base, and Optimistic fair values, plus the sensitivity matrix and FCF history. Free account.
Model inputs
TTM Free Cash Flow
$27M
Cash & equivalents
$86M
Total debt
$9M
Shares outstanding
53M