Water Infrastructure Stocks Q4 Results: Benchmarking Energy Recovery (NASDAQ:ERII)

As the Q4 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the water infrastructure industry, including Energy Recovery (NASDAQ:ERII) and its peers.

Trends towards conservation and reducing groundwater depletion are putting water infrastructure and treatment products front and center. Companies that can innovate and create solutions–especially automated or connected solutions–to address these thematic trends will create incremental demand and speed up replacement cycles. On the other hand, water infrastructure and treatment companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

The 5 water infrastructure stocks we track reported a slower Q4. As a group, revenues missed analysts’ consensus estimates by 4.5%.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 9.1% since the latest earnings results.

Weakest Q4: Energy Recovery (NASDAQ:ERII)

Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ:ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.

Energy Recovery reported revenues of $66.87 million, flat year on year. This print fell short of analysts’ expectations by 19%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ revenue estimates and a significant miss of analysts’ EBITDA estimates.

Energy Recovery delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 34.7% since reporting and currently trades at $10.53.

Is now the time to buy Energy Recovery? Access our full analysis of the earnings results here, it’s free.

Best Q4: Watts Water Technologies (NYSE:WTS)

Founded in 1874, Watts Water (NYSE:WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.

Watts Water Technologies reported revenues of $625.1 million, up 15.7% year on year, outperforming analysts’ expectations by 2.3%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.

Watts Water Technologies pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 5.2% since reporting. It currently trades at $331.23.

Is now the time to buy Watts Water Technologies? Access our full analysis of the earnings results here, it’s free.

Tennant (NYSE:TNC)

As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE:TNC) designs, manufactures, and sells cleaning products to various sectors.

Tennant reported revenues of $291.6 million, down 11.3% year on year, falling short of analysts’ expectations by 9%. It was a disappointing quarter as it posted full-year EBITDA guidance missing analysts’ expectations significantly and a significant miss of analysts’ revenue estimates.

Tennant delivered the highest full-year guidance raise but had the slowest revenue growth in the group. As expected, the stock is down 24.3% since the results and currently trades at $62.31.

Read our full analysis of Tennant’s results here.

Mueller Water Products (NYSE:MWA)

As one of the oldest companies in the water infrastructure industry, Mueller (NYSE:MWA) is a provider of water infrastructure products and flow control systems for various sectors.

Mueller Water Products reported revenues of $318.2 million, up 4.6% year on year. This number beat analysts’ expectations by 2%. It was a very strong quarter as it also recorded a solid beat of analysts’ adjusted operating income estimates and full-year EBITDA guidance beating analysts’ expectations.

The stock is up 14.3% since reporting and currently trades at $31.46.

Read our full, actionable report on Mueller Water Products here, it’s free.

Xylem (NYSE:XYL)

Formed through a spinoff, Xylem (NYSE:XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.

Xylem reported revenues of $2.40 billion, up 6.3% year on year. This result topped analysts’ expectations by 1.1%. Overall, it was a strong quarter as it also logged a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ EBITDA estimates.

Xylem had the weakest full-year guidance update among its peers. The stock is down 6.3% since reporting and currently trades at $131.37.

Read our full, actionable report on Xylem here, it’s free.

Market Update

Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.

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