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Quest Resource (QRHC)
NASDAQ:QRHC

Quest Resource (QRHC) AI Stock Analysis

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Quest Resource

(NASDAQ:QRHC)

Rating:46Neutral
Price Target:
$2.00
▼(-9.09%Downside)
Quest Resource faces significant challenges in financial performance, with persistent losses and cash flow issues. Weak technical indicators suggest continued downward pressure on the stock. While the earnings call shows strategic initiatives for improvement, immediate financial gains are uncertain. The corporate event's positive outlook provides some long-term potential, but overall risks remain high.

Quest Resource (QRHC) vs. SPDR S&P 500 ETF (SPY)

Quest Resource Business Overview & Revenue Model

Company DescriptionQuest Resource Holding Corporation, together with its subsidiaries, provides solutions for the reuse, recycling, and disposal of various waste streams and recyclables in the United States. It offers disposal and recycling services for motor oil and automotive lubricants, oil filters, scrap tires, oily water, goods destruction, food waste, meat renderings, cooking oil and grease trap waste, plastics, cardboard, metal, glass, mixed paper, construction debris, as well as a large variety of regulated and non-regulated solid, liquid, and gas wastes. The company provides santifreeze and windshield washer fluid, dumpster and compacting equipment, and other minor ancillary services. In addition, it offers landfill diversion services. The company's services focus on the waste streams and recyclables from big box, grocers, and other retailers; automotive maintenance, quick lube, dealerships, and collision repair; transportation, logistics, and internal fleet operators; manufacturing plants; multi-family and commercial properties; restaurant chains and food operations; and construction and demolition projects. It markets its services to automotive, manufacturing, hospitality and retail, construction and demolition, and commercial and multi-family property management industries through direct sales force and strategic partnerships. The company was formerly known as Infinity Resources Holdings Corp. and changed its name to Quest Resource Holding Corporation in October 2013. Quest Resource Holding Corporation was incorporated in 2002 and is based in The Colony, Texas.
How the Company Makes MoneyQuest Resource makes money primarily through its waste management and recycling services. The company charges fees for waste collection, transportation, and disposal, as well as for recycling services that help clients manage their waste streams sustainably. Additionally, Quest Resource offers sustainability consulting services, providing expertise and strategies to help businesses reduce their environmental footprint. Key revenue streams include recurring service contracts with businesses across multiple industries. Partnerships with waste processing facilities and recycling centers also play a significant role in their earnings, enabling them to offer comprehensive and integrated solutions to their clients.

Quest Resource Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: -10.93%|
Next Earnings Date:Aug 18, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant efforts in cost reduction and operational improvements, along with strategic changes in management and board composition. However, these positive actions were overshadowed by a decline in revenue and gross profit, increased SG&A costs, and ongoing challenges with client attrition and accounts receivable. These mixed results suggest a period of transition and restructuring for Quest.
Q1-2025 Updates
Positive Updates
Cost Reduction Initiatives
Quest implemented a series of cost reduction actions, reducing SG&A costs by $3 million on an annualized basis. Additionally, the sale of a non-core part of the RWS business generated $5 million in cash used to reduce debt.
Management and Board Enhancements
Promoted Perry Moss to CEO and added Nick Ober as SVP of Operations. Bob Lipstein, a seasoned financial executive, joined the Board of Directors.
Operational Improvements
Quest has initiated an operations excellence initiative to drive process improvements across the company, with an emphasis on performance and accountability.
Debt Flexibility
Amended debt agreements with lenders PNC and Monroe to provide increased flexibility and eased covenants through 2025.
Negative Updates
Revenue Decline
Revenue for the first quarter decreased by 6% year-over-year to $68.4 million, primarily due to lower volumes from client attrition and specific larger clients.
Gross Profit Decline
Gross profit dollars were $10.9 million, a 22% decrease from last year. The decline was attributed to customer attrition, lower volumes at larger clients, and temporary increased costs related to client onboarding.
SG&A Increase
SG&A costs increased by $1.6 million compared to last year, primarily due to separation costs and the resumption of bonus accruals.
Client Attrition
Client attrition contributed approximately $7 million to the revenue decline, including lost revenue from clients in the divested mall-related business.
Accounts Receivable Issues
DSOs remain elevated due to timing issues with collections from larger customers, impacting cash flow.
Company Guidance
During Quest Resource Holding Corporation's first quarter earnings call for 2025, the company provided guidance focusing on cost reductions, revenue impacts, and operational improvements. The sale of a non-core segment generated $5 million in cash and reduced debt, while overall costs were cut by $3 million annually. The company reported a 6% year-over-year revenue decrease to $68.4 million, primarily due to $7 million lost from client attrition and an $8 million drop in volumes from larger clients. Gross profit fell 22% year-over-year to $10.9 million, driven by client attrition, lower volumes, revenue mix shifts, and temporary cost increases. SG&A expenses rose to $11.4 million, partly due to separation costs and bonus accruals, but are expected to decrease to $9.5 million per quarter in the second half of the year. Quest aims to improve EBITDA and cash flow, enhance operational efficiency, and pay down debt, despite challenges with elevated DSOs and macroeconomic uncertainties affecting some industrial clients.

Quest Resource Financial Statement Overview

Summary
Quest Resource's financial health is under strain with negative margins, stagnant revenue growth, increased leverage, and liquidity concerns. These factors indicate the need for strategic improvements to enhance financial stability.
Income Statement
45
Neutral
Quest Resource's financial results show fluctuations in profitability with a negative net income in recent years. The gross profit margin has been relatively stable but the net profit margin is negative due to losses. Revenue growth has stalled recently, with minimal change from the prior year. The EBIT and EBITDA margins have turned negative, indicating operational challenges.
Balance Sheet
50
Neutral
The company's balance sheet indicates a moderate debt-to-equity ratio, though the rising debt levels and declining equity are concerning. The return on equity is negative due to recent losses, which might affect future financial stability. The equity ratio has decreased over time, highlighting increased leverage.
Cash Flow
40
Negative
Quest Resource's cash flow statement reveals negative operating and free cash flows, indicating liquidity constraints. The operating cash flow to net income ratio is negative, reflecting challenges in generating cash from operations. The free cash flow to net income ratio is also negative, highlighting inefficiencies in cash use.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
288.53M288.38M284.04M155.72M98.66M
Gross Profit
49.99M50.06M48.86M28.82M19.05M
EBIT
-4.46M2.82M1.41M4.62M2.16M
EBITDA
5.81M13.11M11.78M7.49M3.47M
Net Income Common Stockholders
-15.06M-7.29M-6.05M1.69M1.03M
Balance SheetCash, Cash Equivalents and Short-Term Investments
396.00K324.01K9.56M8.43M7.52M
Total Assets
175.65M177.12M181.49M175.67M102.23M
Total Debt
79.18M67.57M71.73M63.74M15.57M
Net Debt
78.79M67.24M62.17M55.31M8.06M
Total Liabilities
121.49M110.84M110.35M102.04M34.19M
Stockholders Equity
54.16M66.28M71.14M73.63M68.04M
Cash FlowFree Cash Flow
-10.77M-3.26M-4.04M1.93M2.59M
Operating Cash Flow
-6.08M-1.36M-2.34M2.57M3.10M
Investing Cash Flow
-5.97M-1.90M-4.33M-16.93M-506.07K
Financing Cash Flow
12.13M-5.98M7.81M15.27M1.51M

Quest Resource Technical Analysis

Technical Analysis Sentiment
Negative
Last Price2.20
Price Trends
50DMA
2.39
Negative
100DMA
3.58
Negative
200DMA
5.63
Negative
Market Momentum
MACD
-0.08
Negative
RSI
46.06
Neutral
STOCH
35.98
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For QRHC, the sentiment is Negative. The current price of 2.2 is below the 20-day moving average (MA) of 2.29, below the 50-day MA of 2.39, and below the 200-day MA of 5.63, indicating a bearish trend. The MACD of -0.08 indicates Negative momentum. The RSI at 46.06 is Neutral, neither overbought nor oversold. The STOCH value of 35.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for QRHC.

Quest Resource Risk Analysis

Quest Resource disclosed 35 risk factors in its most recent earnings report. Quest Resource reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Any inability to adapt to and manage the benefits and risks of artificial intelligence could expose us to liability or put us at a disadvantage. Q4, 2024

Quest Resource Peers Comparison

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
66
Neutral
$4.49B12.285.32%248.53%4.08%-12.00%
49
Neutral
$66.16M77.71%1.71%-3.55%
46
Neutral
$46.43M-44.84%-0.91%-305.99%
44
Neutral
$15.76M-90.36%-87.59%51.14%
36
Underperform
$7.03M-167.48%-100.00%24.94%
35
Underperform
$93.55M5.34-13.60%-49.19%-1214.66%
$67.32M-4.77%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
QRHC
Quest Resource
2.20
-6.53
-74.80%
AQMS
Aqua Metals
0.73
-6.99
-90.54%
TPIC
TPI Composites
1.27
-3.49
-73.32%
CETY
Clean Energy Technologies
0.27
-0.96
-78.05%
YGMZ
MingZhu Logistics Holdings
1.23
-1.76
-58.86%
RAYA
Erayak Power Solution Group Incorporation Class A
1.83
0.89
94.68%

Quest Resource Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Quest Resource Amends Credit Agreements for Flexibility
Neutral
May 13, 2025

On May 12, 2025, Quest Resource Holding Corporation and its domestic subsidiaries entered into amendments to their existing credit agreements with Monroe Capital Management Advisors, LLC and PNC Bank, National Association. These amendments waived financial covenant testing for the first quarter of 2025 and modified interest rates and financial covenants, impacting the company’s financial flexibility and operational strategy. Additionally, an intercreditor agreement amendment was made to define the relative rights of PNC Bank and Monroe Capital concerning their collateral interests.

The most recent analyst rating on (QRHC) stock is a Buy with a $13.00 price target. To see the full list of analyst forecasts on Quest Resource stock, see the QRHC Stock Forecast page.

Executive/Board Changes
Quest Resource Modifies Board with New Cooperation Agreement
Neutral
May 7, 2025

On May 7, 2025, Quest Resource Holding Corporation entered into a Cooperation Agreement with the Wynnefield Group to modify its Board of Directors. The agreement involves increasing the board size to seven directors, appointing Robert Lipstein as a new Class III director, and including him in the Audit Committee. The agreement also outlines conditions for replacing the director if necessary and includes provisions for voting commitments, standstill, and non-disparagement during the Cooperation Period, which extends until 30 days before the 2027 Annual Meeting’s nomination deadline.

M&A TransactionsBusiness Operations and Strategy
Quest Resource Updates Investor Presentation on Growth Strategy
Positive
Mar 14, 2025

Quest Resource Holding Corporation has released an updated investor presentation, replacing previous versions, to be presented at investor meetings. The company emphasizes its growth strategy and focus on providing value-added services to high-value clients in strategic markets, resulting in a sustainable improvement in profitability. Quest’s transformation includes exiting low-value accounts, expanding through disciplined M&A, and achieving a 20% CAGR in revenue from 2016 to 2024. The company aims to enhance sustainability and compliance for its clients, addressing key challenges in the waste and recycling industry.

Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Quest Resource Appoints New CEO Amid Financial Report
Neutral
Mar 12, 2025

On March 12, 2025, Quest Resource Holding Corporation announced the retirement of its President and CEO, S. Ray Hatch, effective immediately, with his final employment day being March 28, 2025. Perry W. Moss, previously the Chief Revenue Officer, has been appointed as the new President and CEO. The company also reported its financial results for the fourth quarter and fiscal year 2024, highlighting a slight increase in revenue but a decrease in gross profit and adjusted EBITDA compared to the previous year. Quest made significant strides in client acquisition and operational efficiency, including refinancing debt, securing new clients, and reducing headcount, which are expected to improve long-term performance and shareholder value.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.