Energy Recovery (ERII) versus MSC Industrial Direct (NYSE:MSM) Financial Review

MSC Industrial Direct (NYSE: MSM) and Energy Recovery (NASDAQ:ERII) are both industrial products companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations for MSC Industrial Direct and Energy Recovery, as provided by

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MSC Industrial Direct 1 10 4 0 2.20
Energy Recovery 0 0 5 0 3.00

MSC Industrial Direct presently has a consensus price target of $90.17, suggesting a potential upside of 29.31%. Energy Recovery has a consensus price target of $18.40, suggesting a potential upside of 191.14%. Given Energy Recovery’s stronger consensus rating and higher possible upside, analysts clearly believe Energy Recovery is more favorable than MSC Industrial Direct.

Institutional and Insider Ownership

76.8% of MSC Industrial Direct shares are owned by institutional investors. Comparatively, 31.9% of Energy Recovery shares are owned by institutional investors. 31.3% of MSC Industrial Direct shares are owned by insiders. Comparatively, 23.6% of Energy Recovery shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.


MSC Industrial Direct pays an annual dividend of $1.80 per share and has a dividend yield of 2.6%. Energy Recovery does not pay a dividend. MSC Industrial Direct pays out 45.1% of its earnings in the form of a dividend. MSC Industrial Direct has raised its dividend for 6 consecutive years.

Risk & Volatility

MSC Industrial Direct has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500. Comparatively, Energy Recovery has a beta of 5.51, meaning that its stock price is 451% more volatile than the S&P 500.


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

Net Margins Return on Equity Return on Assets
MSC Industrial Direct 8.07% 20.05% 11.38%
Energy Recovery 3.07% 2.43% 1.07%

Earnings & Valuation

This table compares MSC Industrial Direct and Energy Recovery’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MSC Industrial Direct $2.88 billion 1.09 $443.59 million $3.99 17.48
Energy Recovery $55.87 million 6.06 $3.95 million $0.03 210.74

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


MSC Industrial Direct beats Energy Recovery on 10 of the 17 factors compared between the two stocks.

About MSC Industrial Direct

MSC Industrial Direct Co., Inc. is a North American distributor of metalworking and maintenance, repair and operations (MRO) products and services. The Company’s range of MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components and electrical supplies. The Company serves a range of customers throughout the United States, Canada and the United Kingdom, from individual machine shops, to manufacturing companies, to government agencies, such as the General Services Administration and the Department of Defense. The Company also serves durable and non-durable goods manufacturing, education and healthcare markets, among others. As of September 3, 2016, the Company had operated a network of 12 customer fulfillment centers.

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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