One-glance verdict
Undervalued
$15.34 our estimate vs market $2.10
Wall Street consensus: $4.03 (-73.8% lower than our fair-value estimate)
86% below our estimate, below the bear case
Fundamentals snapshot
Arq, Inc.
ARQ · NGM · Industrials · Pollution & Treatment Controls
Current price
$2.10
52-week range
$1.54 - $7.70
Market cap
$91.92M
Balance sheet
Distressed
-3.31x Concerning
Net debt $37.16M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
1 Risk
2 rewards · 1 risks
- Reward Revenue grew 62.9% last year.
- Reward Free cash flow was positive in 3/10 years.
- Risk Return on equity was -27.1% last year — the company lost money on shareholders' equity.
What this company does
Arq, Inc.
Arq is an environmental technology company that sells special carbon-based products to clean up pollution in our air, water, and soil. The company primarily makes money from industries that must regularly buy these products to meet government environmental standards or clean up contaminated sites. Because these products are consumable (meaning they get used up and have to be replaced), Arq can create a potentially steady business as customers need to reorder.
How the company got here
Founded in 1997 as Advanced Emissions Solutions (ADES), the company originally focused on helping coal-fired power plants reduce mercury emissions. A major turning point was the 2023 acquisition of a company named Arq Limited, which had a technology to create high-value carbon products from coal mining waste. This move broadened the company's scope beyond power plants to other environmental technology applications. To reflect this new, wider focus, the company officially rebranded as Arq, Inc. in February 2024.
What it actually does
Arq creates products that act like powerful sponges to clean the air, water, and soil. Its main ingredient is activated carbon, a material processed to have a huge number of tiny pores that trap and hold onto pollutants and unwanted chemicals. Think of it like a super-powered filter used in everything from industrial smokestacks to drinking water treatment systems. The company is unique because it controls its entire supply chain (the complete process of making and selling goods, from getting raw materials to delivering the final product), as it owns its own mine for the primary raw material.
Advanced Purification Technologies
This is the company's core business, making up all of its sales. It involves manufacturing and selling different forms of activated carbon products that are used to remove contaminants. Customers include power plants, industrial factories, and municipal water treatment facilities who buy these products to comply with environmental regulations. The products come in different forms, like a fine powder called Powdered Activated Carbon (PAC) or small pellets known as Granular Activated Carbon (GAC), each suited for different purification jobs.
What management is betting on now
The company's main focus is on strengthening its profitable Powdered Activated Carbon (PAC) business while exploring the higher-margin (meaning it keeps a larger percentage of the sale price as profit) market for Granular Activated Carbon (GAC). Management has temporarily paused GAC production to review its processes, aiming to improve profitability before restarting. They are also betting on diversifying their customer base beyond the declining coal power industry into new areas like water purification, especially to tackle contaminants like PFAS (a group of man-made chemicals found in many consumer products). This strategy is reflected in their first-ever issuance of financial guidance (a company's projection of its future earnings), which is based solely on the performance of the core PAC business.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$-5.75M
FY2024 Q4
$-37.75M
FY2025 Q1
$-9.51M
FY2025 Q2
$-1.35M
FY2025 Q3
$3.10M
FY2025 Q4
$-3.54M
FY2026 Q1
$-676.00K
FY2026 Q2
$-3.96M
Revenue
—
Net income
$-733.00K
Diluted EPS
-0.02
Operating cash flow
$-2.72M
Free cash flow
$-3.96M
Fetching…
Sources
Revenue
—
Net income
$-842.00K
Diluted EPS
-0.02
Operating cash flow
$64.00K
Free cash flow
$-676.00K
Fetching…
Sources
Revenue
—
Net income
$-50.03M
Diluted EPS
-1.20
Operating cash flow
$-2.76M
Free cash flow
$-3.54M
Fetching…
Sources
Revenue
—
Net income
$-653.00K
Diluted EPS
-0.02
Operating cash flow
$5.30M
Free cash flow
$3.10M
Fetching…
Sources
Revenue
—
Net income
$-2.13M
Diluted EPS
-0.05
Operating cash flow
$527.00K
Free cash flow
$-1.35M
Fetching…
Sources
Revenue
—
Net income
$203.00K
Diluted EPS
0.00
Operating cash flow
$-5.80M
Free cash flow
$-9.51M
Fetching…
Sources
Revenue
—
Net income
$-1.34M
Diluted EPS
-0.03
Operating cash flow
$5.21M
Free cash flow
$-37.75M
Fetching…
Sources
Revenue
—
Net income
$1.62M
Diluted EPS
0.04
Operating cash flow
$7.69M
Free cash flow
$-5.75M
Fetching…
Sources
Is it cheap or expensive?
Fair value $15.34 vs current price $2.10
Wall Street consensus is the average analyst price target: $4.03 (-73.8% lower than our fair-value estimate).
Our most-likely fair value is $15.34 a share — about 628.9% above today's price of $2.10, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $37.2M. Interest coverage -3.3x.
Net debt
$37.16M
Interest coverage
-3.31x
Arq, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 4 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
ARQ
BASELINE
Arq, Inc.
Total debt $38.06M Interest coverage -3.31x This is the baseline the peer rows are being compared against.
Total debt $117.00K Interest coverage -13.52x Neither company has much profit cushion over interest right now.
Total debt $238.98K Interest coverage -217.97x Neither company has much profit cushion over interest right now.
Total debt $4.11M Interest coverage -513.14x Neither company has much profit cushion over interest right now.
Total debt $3.39M Interest coverage -7.47x Neither company has much profit cushion over interest right now.
What you should know
The case for and against ARQ
2 Rewards
1 Risk
Rewards
-
Revenue grew 62.9% last year.
-
Free cash flow was positive in 3/10 years.
Risks
-
Return on equity was -27.1% last year — the company lost money on shareholders' equity.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
52.62x
P/B
0.54x
P/S
0.74x
EV/EBITDA
25.30x
PEG ratio
11.75x
Profitability
How much profit each dollar creates
Gross margin
33.1%
Operating margin
0.7%
Net margin
-42.2%
ROE
-27.1%
ROA
-1.9%
Health
Liquidity and balance-sheet strength
Debt / equity
0.23x
Current ratio
1.03x
Quick ratio
0.46x
Total debt
$38.06M
Total cash
$906.00K
Growth
How the business has been compounding
Revenue TTM
$95.35M
Revenue 5Y CAGR
29.5%
EPS TTM
-1.25
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$-113.00K
Free CF TTM
$-11.31M
FCF margin
-11.9%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2020-02-20