One-glance verdict
Undervalued
$13.76 our estimate vs market $1.77
Wall Street consensus: $4.03 (-70.8% lower than our fair-value estimate)
87% below our estimate, below the bear case
Fundamentals snapshot
Arq, Inc.
ARQ · NGM · Industrials · Pollution & Treatment Controls
Current price
$1.77
52-week range
$1.54 - $6.73
Market cap
$77.29M
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, Inc. sells things like special carbon filters to clean air, water, and soil. Most of their money comes from selling these products, which are used by other companies for things like cleaning up pollution. This matters because they are providing solutions that help protect the environment.
How the company got here
Arq, Inc., formerly known as Advanced Emissions Solutions, Inc., has been in the environmental technology business since 1997. The company's journey has involved a focus on developing and providing solutions for air, water, and soil purification. A significant turning point was the acquisition of a UK-based company also named Arq in 2023, which specialized in specialty carbon products derived from coal mining waste. This acquisition, along with a rebranding to Arq, Inc. in February 2024, signaled a renewed focus on growth and expansion, particularly into the granular activated carbon (GAC) markets. The company's history is rooted in providing products to control contaminants for power generation and industrial companies.
What it actually does
Arq, Inc. is an environmental technology company that creates and sells products designed to clean air, water, and soil. Their main focus is on activated carbon (AC), a material that acts like a sponge to absorb and remove contaminants. Think of it like a very specialized filter for environmental pollutants. Arq's products are used in a variety of applications, from cleaning mercury out of emissions from power plants to purifying drinking water and cleaning up contaminated soil and groundwater.
Activated Carbon Solutions
This is Arq's primary business, where they produce and sell activated carbon (AC) products. Activated carbon is a highly porous material that has a large surface area, making it excellent at trapping and removing impurities from air and water. Arq offers different forms of activated carbon, including powdered (PAC) and granular (GAC), each suited for specific applications. They also produce colloidal carbon products and additives for air emissions control. These solutions are crucial for industries needing to meet environmental regulations by removing pollutants like mercury and emerging contaminants such as PFAS (per- and polyfluoroalkyl substances), often referred to as 'forever chemicals'.
Refined Coal
The Refined Coal segment, which includes entities like the Tinuum Group, Tinuum Services, and GWN Manager, is another area where Arq operates. This segment is involved in processes related to coal, likely focusing on making it cleaner or more efficient for use, or managing its byproducts. While the specifics are less detailed in public information, it represents a distinct way Arq generates revenue, potentially tied to the broader energy sector and environmental compliance within it.
What management is betting on now
Arq's management is currently focused on expanding its presence in the granular activated carbon (GAC) market, which is seen as a significant growth opportunity with higher profit potential. They are investing in increasing their GAC production capacity, with plans for modular expansion at their existing facility. This strategy aims to capture a larger share of the market for treating emerging contaminants like PFAS and to capitalize on stricter environmental regulations. The company is also working on improving operational efficiencies and securing new customer contracts to drive revenue growth and profitability.
Price history
How the share price has moved
—
Loading price history…
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 $13.76 vs current price $1.77
Wall Street consensus is the average analyst price target: $4.03 (-70.8% lower than our fair-value estimate).
Our most-likely fair value is $13.76 a share — about 677.5% above today's price of $1.77, 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
44.25x
P/B
0.45x
P/S
0.63x
EV/EBITDA
22.43x
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
-1.27
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
0.0%
Payout ratio
0.0%
Last ex-div date
2020-02-20