Art’s-Way Manufacturing (NASDAQ:ARTW – Get Free Report) and Energy Recovery (NASDAQ:ERII – Get Free Report) are both small-cap industrials companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.
Analyst Recommendations
This is a summary of current ratings and recommmendations for Art’s-Way Manufacturing and Energy Recovery, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Art’s-Way Manufacturing | 1 | 0 | 0 | 0 | 1.00 |
| Energy Recovery | 1 | 3 | 1 | 0 | 2.00 |
Energy Recovery has a consensus target price of $13.50, suggesting a potential upside of 74.87%. Given Energy Recovery’s stronger consensus rating and higher possible upside, analysts clearly believe Energy Recovery is more favorable than Art’s-Way Manufacturing.
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Art’s-Way Manufacturing | $22.98 million | 0.64 | $1.03 million | ($0.01) | -282.00 |
| Energy Recovery | $134.99 million | 2.95 | $22.96 million | $0.28 | 27.57 |
Energy Recovery has higher revenue and earnings than Art’s-Way Manufacturing. Art’s-Way Manufacturing is trading at a lower price-to-earnings ratio than Energy Recovery, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
2.9% of Art’s-Way Manufacturing shares are owned by institutional investors. Comparatively, 83.6% of Energy Recovery shares are owned by institutional investors. 51.5% of Art’s-Way Manufacturing shares are owned by company insiders. Comparatively, 2.5% of Energy Recovery shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Profitability
This table compares Art’s-Way Manufacturing and Energy Recovery’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Art’s-Way Manufacturing | -0.08% | -0.16% | -0.10% |
| Energy Recovery | 12.72% | 8.25% | 7.24% |
Volatility and Risk
Art’s-Way Manufacturing has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, Energy Recovery has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.
Summary
Energy Recovery beats Art’s-Way Manufacturing on 12 of the 14 factors compared between the two stocks.
About Art’s-Way Manufacturing
Art’s-Way Manufacturing Co., Inc. manufactures and distributes farm equipment products. It operates through the Agricultural Products, and Modular Buildings segments. The Agricultural Products segment manufactures a variety of specialized farm machinery under its own label including portable and stationary animal feed processing equipment and related attachments used to mill and mix feed grains into custom animal feed rations, a line of forage equipment consisting of forage boxes, bale processors, running gear, and dump boxes, a line of manure spreaders, sugar beet harvesting equipment, and a line of dirt work equipment. The Modular Buildings segment produces and sells modular buildings, which are custom designed to meet the specific research needs of its customers. It also provides services relating to the design, manufacturing, delivery, installation and renting of the building units that it produces. The company was founded by Arthur Luscombe in 1956 and is headquartered in Armstrong, IA.
About Energy Recovery
Energy Recovery, Inc., together with its subsidiaries, designs, manufactures, and sells energy efficiency technology solutions in the Americas, the Middle East, Africa, Asia, and Europe. The company operates through Water and Emerging Technologies segments. The company offers high and low pressure, and ultra pressure exchangers; AT and LPT hydraulic turbochargers; and high-pressure feed and circulation booster pumps for use in seawater and brackish desalination, and wastewater treatment. It also provides PX G1300, which reduces energy consumption and operating costs of carbon dioxide-based refrigeration systems; and spare parts, as well as repair, field, and commissioning services. It sells its products under the ERI, PX, Pressure Exchanger, PX Pressure Exchanger, Ultra PX, PX G, PX G1300, PX PowerTrain, AT, and Aquabold brands to original equipment manufacturers, supermarket chains, cold storage facilities, refrigeration system installers, and other industrial users; aftermarket customers consisting of desalination plant owners and operators; and project developers, end-users, and industry consultants, as well as engineering, procurement, and construction firms. Energy Recovery, Inc. was incorporated in 1992 and is headquartered in San Leandro, California.
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