Energy Recovery (NASDAQ:ERII) Misses Q2 CY2026 Revenue Estimates, Stock Drops
Energy Recovery (NASDAQ: ERII) reported Q2 CY2026 revenue of $12 million, down 57.2% year on year, missing analysts’ expectations. Adjusted non-GAAP EPS was -$0.03, matching consensus. The company’s operating margin was negative 49% in Q2. Shares fell 6.4% to $8.28. Analysts expect revenue to decline 19.2% over 12 months.
How this was made
The 30-second read
Why it matters
Q2 results show a steep YoY revenue decline and a large deterioration in operating margin, while adjusted EPS met consensus; the market reaction was a 6.4% drop immediately after reporting.
Market read
This is a company-specific earnings miss on revenue with margin deterioration, plus a forward-looking expectation of continued revenue decline over the next 12 months.
What to watch
The article notes operating inefficiencies from higher operating expenses, but does not quantify guidance or backlog; traders may need to verify whether the revenue drop is temporary cycle noise versus structural.
Background
Energy Recovery sells energy recovery devices used in water treatment, oil and gas, and chemical processing.
Ticker impact
Energy Recovery reported Q2 CY2026 revenue of $12M, down 57.2% YoY, missing Wall Street estimates, and shares fell 6.4% to $8.28.
Bearish bias for ERII into the next earnings cycle, with downside risk if the 12-month revenue decline forecast is reiterated or worsens.
The article provides multiple hard datapoints: 57.2% YoY revenue decline, operating margin turning deeply negative in Q2, and a sell-side expectation for further revenue decline over the next 12 months. EPS met estimates, which may limit the magnitude of further selling, but the revenue miss and margin deterioration are typically the dominant drivers for small-cap industrials.
Market effects
Signals demand headwinds for industrial water and energy recovery equipment, though it is company-specific rather than a sector-wide datapoint.
No explicit regional macro linkage provided; impact is primarily on ERII sentiment.
No global supply-chain or international demand details provided.
Counterpoint
EPS met consensus and gross margin rose, suggesting the revenue decline may be partially offset by cost structure, which could stabilize the stock if management addresses operating expense pressure.
Key entities
- companyEnergy Recovery
NASDAQ-listed energy recovery device manufacturer reporting Q2 CY2026 results.
- market_referenceWall Street estimates
Consensus revenue and EPS expectations referenced in the article.
