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4 Pollution Control Stocks to Watch Despite Industry Headwinds
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Growing preference for alternative fuels and electric vehicles, high costs related to frequent product upgrades and lingering effects of supply-chain issues have marred the outlook of the Zacks Pollution Control industry. Another concern for industry players has been the shortage of skilled labor in the United States.
However, strong demand for air pollution control products, driven by increasing greenhouse gas emissions and growing public awareness of the health-related risks, has allowed the industry participants to stay competitive in the market. Tetra Tech, Inc. (TTEK - Free Report) , Atmus Filtration Technologies Inc. (ATMU - Free Report) , Energy Recovery, Inc. (ERII - Free Report) and LiqTech International, Inc. (LIQT - Free Report) are likely to capitalize on these opportunities.
About the Industry
The Zacks Pollution Control industry comprises companies engaged in providing innovative filtration systems, replacement parts, solutions for managing medical wastes, energy recovery devices and other products. These products are primarily used in commercial, automotive repair, industrial, home healthcare, retail, construction, pharmaceutical and hospitality end markets. A few industry participants offer solutions to deal with industrial waste and commercial chemical products and technologies to tackle air pollution. One of the companies also delivers services related to infrastructure, water, resource management, energy, etc., to governments and commercial clients. These companies are enhancing investments in developing innovative technologies, improving customer and employee experience and enhancing supply-chain modernization programs.
Major Trends Shaping the Future of the Pollution Control Industry
Emergence of Alternative Sources of Energy: The growing preference for renewable energy sources for power generation to reduce dependency on coal in the United States and other developed countries across the world is restraining the demand for industrial emission-abatement products and technologies. Several factors, including supportive government policies related to renewable energy, higher renewable investments, a reduction in the overall costs of generating renewable electricity and the rapid adoption of electric vehicles (EVs), have made the prospects of the industry players gloomy.
Costs Related to Investments in Product Updates: Based on the guidelines of the pollution control boards in several countries, pollution-control equipment manufacturers frequently update their products and services. Such frequent investments often hurt the margins and profitability of the industry participants. The lingering effects of supply-chain constraints may continue weighing on the profitability of several industry participants. The shortage of skilled workers in the United States is another persistent concern for the industry.
Strong Demand for Air Pollution Control: Rapid urbanization and the consequent rise in greenhouse gas emissions from the industrial sector have been driving demand for air quality control systems. Growing public awareness of the health risks associated with air pollution is driving market growth. Also, the expansion of infrastructure projects in developing countries is boosting the demand for pollution abatement equipment and technologies.
Zacks Industry Rank Indicates Weak Prospects
The Zacks Pollution Control industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #147. This rank places it in the bottom 40% of 245 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the weak earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are keeping less faith in this group's earnings growth potential. The industry’s earnings estimates for 2025 have decreased 3.2% since the end of May 2024.
Despite bleak near-term prospects, we will present a few stocks that you may want to retain in your portfolios. But it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms Sector & S&P 500
Over the past year, the Zacks Pollution Control industry has underperformed the Zacks S&P 500 composite index and the broader Industrial Products sector.
Over this period, the industry has declined 5.1% against the broader sector’s and the S&P 500 Index’s increase of 0.7% and 12.3%, respectively.
One-Year Price Performance
Industry's Current Valuation
Based on the forward P/E (F12M), a commonly used multiple for valuing pollution control stocks, the industry is currently trading at 19.54X compared with the S&P 500’s 21.79X. It is above the sector’s P/E (F12M) ratio of 18.99X.
In the past five years, the industry has traded as high as 29.71X, as low as 17.52X and at the median of 22.95X, as the chart below shows:
Price-to-Earnings Ratio vs SP500
Price-to-Earnings Ratio vs Sector
Four Pollution Control Stocks to Keep a Tab on
Tetra Tech: Headquartered in Pasadena, CA, the company is a leading provider of consulting, engineering, program management and technical services. It serves clients by providing cost-effective and innovative solutions for dealing with the fundamental needs for water, environmental and alternative energy services. Tetra Tech is benefiting from its focus on providing high-end consulting, design and engineering services. The U.S. government’s priorities on infrastructure development and its focus on climate change, water and environment are likely to benefit TTEK in the quarters ahead.
This Zacks Rank #2 (Buy) company’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 3.8%. The Zacks Consensus Estimate for TTEK’s fiscal 2025 (ending September 2025) earnings has been revised upward by 3.7% in the past 60 days. The stock has gained 28.1% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: TTEK
LiqTech: Based in Ballerup, Denmark, LIQT is engaged in manufacturing and marketing specialized filtration products and systems in the Americas, Europe, the Asia-Pacific, the Middle East and Africa. The company also produces silicon carbide ceramic and diesel particulate filters. Rising demand for liquid filtration systems and plastic products is supporting LiqTech’s growth. LIQT’s focus on expanding product offerings for both existing and new markets also bodes well.
The Zacks Consensus Estimate for this Zacks Rank #2 company’s 2025 revenues is pegged at $19 million, indicating an increase of 30.1% from the year-ago quarter’s figure. The stock has gained 17.3% in the past three months.
Price and Consensus: LIQT
Atmus Filtration: Headquartered in Nashville, TN, the company is a leading designer and producer of filtration and media solutions. ATMU’s leading position in the industrial filtration market, effective pricing actions and sound capital allocation strategy are expected to support its growth. Its global footprint, comprehensive offering of premium products and technology leadership should also bolster growth. ATMU currently carries a Zacks Rank #3 (Hold).
Atmus Filtration’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 14%. Though shares of the company declined 3.2% in the past three months, the same have gained 24.1% in the past year.
Price and Consensus: ATMU
Energy Recovery: Based in San Leandro, CA, the company is engaged in manufacturing and designing energy efficiency technology solutions utilized in the water desalination industry. Energy Recovery is poised to benefit from strength in its original equipment manufacturer business in the quarters ahead. New product introductions and a strong pipeline of projects also bode well for it.
The Zacks Consensus Estimate for this Zacks Rank #3 company’s 2025 revenues is pegged at $148.9 million, indicating an increase of 2.6% from the year-ago quarter’s figure.
Price and Consensus: ERII
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4 Pollution Control Stocks to Watch Despite Industry Headwinds
Growing preference for alternative fuels and electric vehicles, high costs related to frequent product upgrades and lingering effects of supply-chain issues have marred the outlook of the Zacks Pollution Control industry. Another concern for industry players has been the shortage of skilled labor in the United States.
However, strong demand for air pollution control products, driven by increasing greenhouse gas emissions and growing public awareness of the health-related risks, has allowed the industry participants to stay competitive in the market. Tetra Tech, Inc. (TTEK - Free Report) , Atmus Filtration Technologies Inc. (ATMU - Free Report) , Energy Recovery, Inc. (ERII - Free Report) and LiqTech International, Inc. (LIQT - Free Report) are likely to capitalize on these opportunities.
About the Industry
The Zacks Pollution Control industry comprises companies engaged in providing innovative filtration systems, replacement parts, solutions for managing medical wastes, energy recovery devices and other products. These products are primarily used in commercial, automotive repair, industrial, home healthcare, retail, construction, pharmaceutical and hospitality end markets. A few industry participants offer solutions to deal with industrial waste and commercial chemical products and technologies to tackle air pollution. One of the companies also delivers services related to infrastructure, water, resource management, energy, etc., to governments and commercial clients. These companies are enhancing investments in developing innovative technologies, improving customer and employee experience and enhancing supply-chain modernization programs.
Major Trends Shaping the Future of the Pollution Control Industry
Emergence of Alternative Sources of Energy: The growing preference for renewable energy sources for power generation to reduce dependency on coal in the United States and other developed countries across the world is restraining the demand for industrial emission-abatement products and technologies. Several factors, including supportive government policies related to renewable energy, higher renewable investments, a reduction in the overall costs of generating renewable electricity and the rapid adoption of electric vehicles (EVs), have made the prospects of the industry players gloomy.
Costs Related to Investments in Product Updates: Based on the guidelines of the pollution control boards in several countries, pollution-control equipment manufacturers frequently update their products and services. Such frequent investments often hurt the margins and profitability of the industry participants. The lingering effects of supply-chain constraints may continue weighing on the profitability of several industry participants. The shortage of skilled workers in the United States is another persistent concern for the industry.
Strong Demand for Air Pollution Control: Rapid urbanization and the consequent rise in greenhouse gas emissions from the industrial sector have been driving demand for air quality control systems. Growing public awareness of the health risks associated with air pollution is driving market growth. Also, the expansion of infrastructure projects in developing countries is boosting the demand for pollution abatement equipment and technologies.
Zacks Industry Rank Indicates Weak Prospects
The Zacks Pollution Control industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #147. This rank places it in the bottom 40% of 245 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the weak earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are keeping less faith in this group's earnings growth potential. The industry’s earnings estimates for 2025 have decreased 3.2% since the end of May 2024.
Despite bleak near-term prospects, we will present a few stocks that you may want to retain in your portfolios. But it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms Sector & S&P 500
Over the past year, the Zacks Pollution Control industry has underperformed the Zacks S&P 500 composite index and the broader Industrial Products sector.
Over this period, the industry has declined 5.1% against the broader sector’s and the S&P 500 Index’s increase of 0.7% and 12.3%, respectively.
One-Year Price Performance
Industry's Current Valuation
Based on the forward P/E (F12M), a commonly used multiple for valuing pollution control stocks, the industry is currently trading at 19.54X compared with the S&P 500’s 21.79X. It is above the sector’s P/E (F12M) ratio of 18.99X.
In the past five years, the industry has traded as high as 29.71X, as low as 17.52X and at the median of 22.95X, as the chart below shows:
Price-to-Earnings Ratio vs SP500
Price-to-Earnings Ratio vs Sector
Four Pollution Control Stocks to Keep a Tab on
Tetra Tech: Headquartered in Pasadena, CA, the company is a leading provider of consulting, engineering, program management and technical services. It serves clients by providing cost-effective and innovative solutions for dealing with the fundamental needs for water, environmental and alternative energy services. Tetra Tech is benefiting from its focus on providing high-end consulting, design and engineering services. The U.S. government’s priorities on infrastructure development and its focus on climate change, water and environment are likely to benefit TTEK in the quarters ahead.
This Zacks Rank #2 (Buy) company’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 3.8%. The Zacks Consensus Estimate for TTEK’s fiscal 2025 (ending September 2025) earnings has been revised upward by 3.7% in the past 60 days. The stock has gained 28.1% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: TTEK
LiqTech: Based in Ballerup, Denmark, LIQT is engaged in manufacturing and marketing specialized filtration products and systems in the Americas, Europe, the Asia-Pacific, the Middle East and Africa. The company also produces silicon carbide ceramic and diesel particulate filters. Rising demand for liquid filtration systems and plastic products is supporting LiqTech’s growth. LIQT’s focus on expanding product offerings for both existing and new markets also bodes well.
The Zacks Consensus Estimate for this Zacks Rank #2 company’s 2025 revenues is pegged at $19 million, indicating an increase of 30.1% from the year-ago quarter’s figure. The stock has gained 17.3% in the past three months.
Price and Consensus: LIQT
Atmus Filtration: Headquartered in Nashville, TN, the company is a leading designer and producer of filtration and media solutions. ATMU’s leading position in the industrial filtration market, effective pricing actions and sound capital allocation strategy are expected to support its growth. Its global footprint, comprehensive offering of premium products and technology leadership should also bolster growth. ATMU currently carries a Zacks Rank #3 (Hold).
Atmus Filtration’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 14%. Though shares of the company declined 3.2% in the past three months, the same have gained 24.1% in the past year.
Price and Consensus: ATMU
Energy Recovery: Based in San Leandro, CA, the company is engaged in manufacturing and designing energy efficiency technology solutions utilized in the water desalination industry. Energy Recovery is poised to benefit from strength in its original equipment manufacturer business in the quarters ahead. New product introductions and a strong pipeline of projects also bode well for it.
The Zacks Consensus Estimate for this Zacks Rank #3 company’s 2025 revenues is pegged at $148.9 million, indicating an increase of 2.6% from the year-ago quarter’s figure.
Price and Consensus: ERII