Critical Review: Quest Resource (NASDAQ:QRHC) vs. ARQ (NASDAQ:ARQ)

Quest Resource (NASDAQ:QRHC) and ARQ (NASDAQ:ARQ) are both small-cap business services companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.

Analyst Recommendations

This is a breakdown of recent ratings for Quest Resource and ARQ, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Quest Resource	1	2	0	0	1.67
ARQ	0	0	3	1	3.25

Quest Resource presently has a consensus target price of $2.25, indicating a potential upside of 34.73%. ARQ has a consensus target price of $10.00, indicating a potential upside of 36.05%. Given ARQ’s stronger consensus rating and higher possible upside, analysts plainly believe ARQ is more favorable than Quest Resource.

Institutional and Insider Ownership

48.2% of Quest Resource shares are held by institutional investors. Comparatively, 18.5% of ARQ shares are held by institutional investors. 22.9% of Quest Resource shares are held by insiders. Comparatively, 23.9% of ARQ shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Quest Resource has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500. Comparatively, ARQ has a beta of 1.78, suggesting that its share price is 78% more volatile than the S&P 500.

Profitability

This table compares Quest Resource and ARQ’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Quest Resource	-9.34%	-13.12%	-3.98%
ARQ	-1.40%	-0.07%	-0.05%

Earnings and Valuation

This table compares Quest Resource and ARQ”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Quest Resource	$288.53 million	0.12	-$15.06 million	($1.21)	-1.38
ARQ	$108.96 million	2.88	-$5.11 million	($0.04)	-183.75

ARQ has lower revenue, but higher earnings than Quest Resource. ARQ is trading at a lower price-to-earnings ratio than Quest Resource, indicating that it is currently the more affordable of the two stocks.

Summary

ARQ beats Quest Resource on 12 of the 15 factors compared between the two stocks.

About Quest Resource

Quest 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. The company provides 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. It offers antifreeze and windshield washer fluid, dumpster and compacting equipment, and other minor ancillary services. In addition, the company offers landfill diversion services. Its 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. The company 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 is headquartered in The Colony, Texas.

About ARQ

Arq, Inc. is a holding company. It engages in the provision of environmental and emission control equipment to the power generation industry. The company operates through the following Segments: Refined Coal and Advanced Purification Technologies. The Refined Coal segment includes the Tinuum Group, Tinuum Services, and GWN Manager. The Advanced Purification Technologies segment refers to the sale of Activated Carbon Injection and Dry Sorbent Injection equipment systems, chemical sales, consulting services, and other sales related to the reduction of emissions in the coal-fired electric generation process and the electric utility industry. The company was founded in 1996 and is headquartered in Greenwood Village, CO.