Technical MACD crossover shows Energy Recovery, Inc. (NASDAQ:ERII
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) could be ready to break the consolidation channel lasting from early June, all we need is somewhat support from the corporate side.
News work pretty well in such cases and Energy Recovery actually has something to show. Promotion of Tim Dyer to the Chief Technology Officer's position was announced on Thursday, coinciding with the beginning of the current price rally.
The further 4% push on Friday has set high expectations for the beginning of this week as well. The rally is not yet overextended, considering the RSI is at 55, but it lacks volume, meaning not too many traders are seeing an opportunity here. MACD has crossed to indicate a trend could be forming and the price has moved above the 50-day moving average as well - these are good signs for follow up buying.
Fundamentals draw a bit darker picture. The price appears exaggerated, considering the declining revenues and the high P/E ratio of 96. Earnings are not stable due to seasonality and varying costs. The price will be driven by the upcoming quarterly results, scheduled to be announced on August 5 and for which analysts predict to be rather satisfying with $13.74 million average sales estimate. However, historically there were little changes in EPS and that is one of the key price driving factors.