Investment Thesis
Quest Resource faces acute financial distress with an interest coverage ratio of 0.1x, indicating the company cannot service its $63.4M debt from operations. Combined with a critically low cash position of $1.1M, negative profitability (-$2.3M net income), and declining revenue (-13.3% YoY), the company exhibits unsustainable leverage and solvency risk.
Strengths
- Operating cash flow positive at $190K despite operational losses
- Current ratio of 1.28x provides minimal near-term liquidity buffer
- 13 Form 4 insider filings suggest management engagement
Risks
- Interest coverage of 0.1x - cannot cover debt service from operating income
- Cash of $1.1M against $63.4M long-term debt creates acute solvency risk
- Revenue declining 13.3% YoY while company remains unprofitable at net income level
- Debt/equity ratio of 1.64x with negative ROE (-6.0%) indicates distressed capital structure
- Free cash flow generation negligible at $110K (0.2% margin) - insufficient for debt reduction
- Gross margin of only 15.7% limits operational flexibility
Key Metrics to Watch
- Interest coverage ratio - must exceed 1.5x for operational viability
- Cash position and debt refinancing needs - critical solvency indicator
- Revenue stabilization and margin expansion - reversal of decline essential
- Operating cash flow improvement - must exceed $2M+ annually to service debt
Financial Metrics
Revenue
61.7M
Net Income
-2.3M
EPS (Diluted)
$-0.11
Free Cash Flow
110.0K
Total Assets
148.0M
Cash
1.1M
Profitability Ratios
Gross Margin
15.7%
Operating Margin
0.4%
Net Margin
-3.8%
ROE
-6.0%
ROA
-1.6%
FCF Margin
0.2%
Balance Sheet & Liquidity
Current Ratio
1.28x
Quick Ratio
1.28x
Debt/Equity
1.64x
Debt/Assets
73.9%
Interest Coverage
0.12x
Long-term Debt
63.4M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T12:45:41.415955 |
Data as of: 2026-03-31 |
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