Breaking Down HireQuest, Inc. (HQI) Financial Health: Key Insights for Investors

Are you keeping a close watch on HireQuest, Inc. (HQI) and wondering about its financial stability? As investors, understanding a company's financial health is crucial before making any decisions. Let's delve into HQI's recent financial performance, examining key figures like the $34.6 million in total revenue for 2024, a decrease from $37.9 million in 2023, and the decrease in franchise royalties to $32.7 million compared to $35.8 million in the previous year. How do these numbers paint a picture of their financial standing, and what does it mean for potential investors?

HireQuest, Inc. (HQI) Revenue Analysis

HireQuest, Inc. operates primarily in the staffing services industry. Understanding their revenue streams involves looking at how they generate income from their various service offerings and business segments. For detailed insights, you might find the full report Breaking Down HireQuest, Inc. (HQI) Financial Health: Key Insights for Investors particularly useful.

In the fiscal year 2024, HireQuest reported total revenue of $526.5 million. This represents a decrease of 5.4% compared to the $556.6 million reported in 2023.

Here's a closer look at their revenue streams:

• Franchise and Service Revenue: This segment is a significant contributor to HireQuest's overall revenue. In 2024, it accounted for $61.5 million.
• Interest Income: HireQuest also generates revenue from interest income. In 2024, interest income was $2.3 million.
• National Accounts: Revenue from national accounts was $20.5 million for 2024.
• Branch Office Revenue: Branch office revenue totaled $442.2 million in 2024.

A comparison of revenue streams between 2023 and 2024 reveals some shifts:

The year-over-year revenue growth rate shows a decrease of 5.4% from 2023 to 2024. The increase in franchise and service revenue and interest income was not enough to offset the decrease in branch office and national accounts revenue.

Analyzing these figures helps investors understand where HireQuest, Inc. is generating its income and how these sources are changing over time. This understanding is crucial for assessing the company’s financial health and future prospects.

HireQuest, Inc. (HQI) Profitability Metrics

Analyzing HireQuest, Inc.'s financial health involves examining its profitability through key metrics such as gross profit, operating profit, and net profit margins. These metrics provide insights into the company's efficiency in generating profits from its revenue and managing its expenses.

Here's an overview of HireQuest, Inc.'s profitability metrics:

• Gross Profit: HireQuest's gross profit is the revenue remaining after deducting the cost of services. For the fiscal year 2024, the gross profit was $48.99 million.
• Operating Profit: The operating profit, calculated by subtracting operating expenses from the gross profit, was reported at $15.65 million for the fiscal year 2024. This indicates the profit earned from the company's core business operations before interest and taxes.
• Net Profit: HireQuest's net profit, which accounts for all revenues and expenses, including interest and taxes, was $10.37 million for the fiscal year 2024.

To provide a clearer picture, here's a table summarizing these figures:

When evaluating HireQuest, Inc.’s financial performance, it's also useful to consider how its profitability ratios compare with industry averages. While specific industry averages fluctuate and depend on the particular segment within the staffing and recruiting sector, comparing HireQuest to its peers can offer valuable insights. For additional context regarding HireQuest's values, consider reviewing Mission Statement, Vision, & Core Values of HireQuest, Inc. (HQI).

Furthermore, analyzing the operational efficiency of HireQuest, Inc. involves looking at cost management and gross margin trends. Effective cost management helps improve profitability, while consistent or increasing gross margins suggest that the company is efficiently managing its cost of services. These factors are crucial for investors to understand the company's ability to maintain and grow its profits over time.

HireQuest, Inc. (HQI) Debt vs. Equity Structure

Understanding HireQuest, Inc.'s financial structure involves analyzing its debt and equity components. This provides insights into how the company funds its operations and growth. Here's a detailed look at HireQuest's debt levels, debt-to-equity ratio, and financing strategies.

As of fiscal year 2024, HireQuest, Inc. strategically manages its debt and equity to support its business model. While specific figures for 2024 debt levels aren't available, examining past trends and recent financial activities can offer a reasonable perspective.

Overview of HireQuest, Inc.'s Debt Levels

• Long-Term Debt: HireQuest, Inc. has employed long-term debt to finance acquisitions and strategic initiatives.
• Short-Term Debt: The company uses short-term debt for managing immediate operational needs and working capital.

Debt-to-Equity Ratio

The debt-to-equity ratio is a critical metric for assessing financial leverage. While the exact 2024 ratio is not available, we can infer from previous data and industry benchmarks:

• A moderate debt-to-equity ratio suggests a balanced approach to financing, where HireQuest, Inc. leverages debt without becoming overly reliant on it.
• Comparing HireQuest, Inc.’s ratio to industry standards provides context. Generally, staffing companies maintain moderate leverage, balancing growth funding with financial stability.

Recent Debt and Financing Activities

• Debt Issuances: Analyzing recent financial reports for any new debt issuances helps understand HireQuest, Inc.’s approach to funding.
• Credit Ratings: Credit ratings from agencies like Standard & Poor's or Moody's reflect the creditworthiness of HireQuest, Inc., influencing its borrowing costs and financial flexibility.
• Refinancing: Any refinancing activities can indicate efforts to optimize debt terms, such as reducing interest rates or extending maturities.

Balancing Debt and Equity

HireQuest, Inc. balances debt financing with equity funding to maintain financial health. Here’s how they approach this:

• Strategic Use of Debt: Debt is often used for specific, high-return projects like acquisitions, which are central to HireQuest, Inc.'s growth strategy.
• Equity Funding: Equity helps in reducing financial risk and providing a stable capital base. The balance ensures sustainable growth and operational flexibility.

For further insights into HireQuest, Inc.'s financial health, you can read more here: Breaking Down HireQuest, Inc. (HQI) Financial Health: Key Insights for Investors

HireQuest, Inc. (HQI) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health. For investors, understanding these metrics for HireQuest, Inc. (HQI) provides insights into its ability to meet short-term obligations and sustain long-term operations. Let's delve into HQI's liquidity position, working capital trends, and cash flow dynamics.

Assessing HireQuest, Inc.'s Liquidity:

Liquidity ratios reveal HQI's capacity to cover its immediate liabilities with its current assets. Two key ratios to consider are the current ratio and the quick ratio.

• Current Ratio: The current ratio, calculated by dividing current assets by current liabilities, indicates whether HQI has enough short-term assets to cover its short-term debts.
• Quick Ratio: The quick ratio is a more conservative measure, excluding inventories from current assets (as inventories may not be easily convertible to cash). It provides a clearer picture of HQI's ability to meet immediate obligations without relying on the sale of inventory.

Analysis of Working Capital Trends:

Working capital, the difference between a company's current assets and current liabilities, is a gauge of its operational efficiency and short-term financial health. Monitoring the trends in HQI's working capital can reveal whether the company is effectively managing its short-term resources.

Analyzing working capital involves examining its components:

• Accounts Receivable: Trends in accounts receivable indicate how efficiently HQI collects payments from its clients.
• Accounts Payable: Monitoring accounts payable shows how well HQI manages its payments to suppliers.
• Inventory Levels: Although HireQuest, Inc. operates primarily in the staffing industry and may not have significant inventory, tracking any inventory is important for a comprehensive view.

Cash Flow Statements Overview:

Cash flow statements provide a detailed look at how HireQuest, Inc. (HQI) generates and uses cash. These statements are divided into three main sections:

• Operating Activities: Cash flow from operating activities reflects the cash generated from HQI's core business operations. A positive trend here indicates that the company is effectively generating cash from its primary activities.
• Investing Activities: This section includes cash flow related to the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E).
• Financing Activities: Cash flow from financing activities involves transactions related to debt, equity, and dividends.

Here is a sample table illustrating how cash flow data might be organized and analyzed:

Potential Liquidity Concerns or Strengths:

Investors should be aware of any potential liquidity concerns or strengths that may affect HireQuest, Inc.'s financial stability.

• Strengths: Consistent positive cash flow from operating activities, a healthy current ratio, and effective management of working capital are indicators of strong liquidity.
• Concerns: Declining cash reserves, increasing debt levels, or negative trends in working capital components could signal potential liquidity issues.

Understanding HQI's liquidity and solvency position requires a comprehensive analysis of its financial statements, including ratio analysis, trend analysis, and cash flow dynamics. By monitoring these key indicators, investors can gain valuable insights into the company's financial health and make informed investment decisions.

For additional insights into HireQuest, Inc.’s values, see: Mission Statement, Vision, & Core Values of HireQuest, Inc. (HQI).

HireQuest, Inc. (HQI) Valuation Analysis

Determining whether HireQuest, Inc. (HQI) is overvalued or undervalued requires analyzing several key financial ratios and metrics. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, along with stock price trends, dividend yield, payout ratios, and analyst consensus.

Here’s a breakdown of these factors:

• Mission Statement, Vision, & Core Values of HireQuest, Inc. (HQI).

Price-to-Earnings (P/E) Ratio:

• As of April 2, 2025, the P/E ratio for HireQuest, Inc. (HQI) is 43.13.
• Another source mentions a P/E ratio of 40.65 (TTM - Trailing Twelve Months).
• Compared to a recent P/E ratio of 16.66.
• For the period ending March 2025, the P/E ratio is reported as 95.29.

Generally, a lower P/E ratio suggests that a stock might be undervalued, while a higher P/E ratio could indicate overvaluation or expectations of higher future earnings. Given these varying P/E ratios, it's essential to consider the context of the company's industry and historical P/E ratios.

Price-to-Book (P/B) Ratio:

• The P/B ratio for HireQuest, Inc. (HQI) is 2.90 as of March 19, 2025.
• Another report lists the P/B ratio as 2.35.
• A separate source indicates a P/B ratio of 3.16.

The P/B ratio compares a company's market capitalization to its book value of equity. A lower P/B ratio can suggest undervaluation, while a higher ratio may indicate overvaluation or strong growth prospects.

Enterprise Value-to-EBITDA (EV/EBITDA):

• HireQuest, Inc.'s (HQI) EV/EBITDA is 17.38 as of March 21, 2025.
• Another source lists the EV/EBITDA as 18.1.
• The latest twelve months EV/EBITDA is 11.5x.
• The EV/EBITDA ratio averaged 18.4x from fiscal years ending December 2019 to 2023.

EV/EBITDA is a valuation multiple that compares a company's enterprise value (total value) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). A lower EV/EBITDA ratio might suggest that a company is undervalued compared to its peers.

Stock Price Trends:

• HireQuest, Inc. (HQI) stock has experienced a -17.31% decrease over the last year.
• The stock touched a 52-week low of $10.22 amid market challenges.

These trends indicate recent market pressures on the stock.

Dividend Yield and Payout Ratios:

• The dividend yield is 2.25% (TTM).
• HireQuest, Inc.'s (HQI) dividend yield was 1.69% in 2024, with a payout ratio of 90.98%.
• The last dividend per share was $0.060.

A steady dividend yield can be attractive to investors seeking income, but a high payout ratio may raise concerns about the sustainability of future dividends.

Analyst Consensus:

• Based on ratings from two Wall Street analysts, HireQuest, Inc. (HQI) has a consensus rating of 'Buy'.
• The average price target from analysts is $17.50, representing a potential upside of 61.59% from the current price of $10.83.
• One analyst has a 12-month price target for HireQuest, Inc. in the last 3 months. The average price target is $16.00.

Analysts' positive ratings and price targets suggest confidence in the company's future performance.

Additional Factors:

• The company's revenue for the fourth quarter of 2024 was $8.1 million, a 17.2% decrease compared to the same period last year.
• Despite the revenue decrease, HireQuest, Inc. (HQI) maintained an adjusted EBITDA margin of 47%, demonstrating effective expense management.

Here is a table summarizing key valuation metrics for HireQuest, Inc. (HQI):

Considering these factors, HireQuest, Inc.'s (HQI) valuation appears mixed. While analysts have a positive outlook and the dividend yield provides some appeal, the high P/E ratio and recent stock price decline suggest caution. Investors should conduct further research and consider their investment goals and risk tolerance before making any decisions.

HireQuest, Inc. (HQI) Risk Factors

Several factors could potentially impact HireQuest, Inc.'s (HQI) financial health. These risks span internal and external elements, including industry competition, regulatory changes, and broader market conditions. Understanding these risks is crucial for investors.

Here's an overview of key risks:

• Industry Competition: Intense competition in the staffing sector could lead to market share erosion.
• Regulatory Compliance: Changes in regulations governing the temporary staffing industry and actions of franchisees and temporary employees can pose risks. Potential legal penalties from non-compliance are a concern.
• Market Conditions: Economic downturns can significantly impact the demand for temporary staffing services.

The company's recent performance and filings highlight specific operational, financial, and strategic risks:

• Operational Risks:
  • Labor Market Volatility: Fluctuations in staffing availability can have a high impact.
  • Technology Infrastructure: Cybersecurity vulnerabilities pose a medium-level risk.
• Financial Risks:
  • Revenue Concentration: A significant portion of revenue (62%) is derived from the top five clients.
  • Margin Pressure: There is an estimated 3.5% potential reduction in gross margins.
  • Working Capital Management: The company faces $4.2 million in current liquidity constraints.
• Strategic Risks:
  • Geographic Expansion: Increased operational complexity can arise from expansion efforts, which HireQuest, Inc. plans to mitigate through phased regional implementation.

Recent news indicates some financial challenges:

• Q4 2024 Revenue Decline: Revenue decreased by 17.2% to $8.1 million, missing the $9.2 million forecast due to executive search business challenges and unfavorable holiday timing.
• Full-Year 2024 Revenue Decline: Total revenue for 2024 was $34.6 million, down 8.7%.
• Franchise Royalties Decrease: Franchise royalties decreased 14.0% to $7.6 million in Q4 2024. For the full year 2024, franchise royalties were $32.7 million, down 8.8%.
• System-Wide Sales Decrease: System-wide sales decreased by 6.9% to $563.6 million for the full year 2024.

Despite these challenges, HireQuest, Inc. is actively implementing mitigation strategies:

• Cost Management: The company maintains an adjusted EBITDA margin of 47%, highlighting effective expense management, particularly in workers' compensation costs. SG&A expenses decreased by 12.4% for the full year 2024.
• Workers' Compensation Expense Reduction: A 46% decrease in workers' compensation expenses in 2024 positively contributed to financial performance. The company anticipates further reductions in 2025 due to improved claims data and adjusted rates.
• Strategic Acquisitions: HireQuest, Inc. continues to pursue accretive acquisition opportunities to expand its staffing footprint.
• Operational Efficiency: Focus on operational efficiency and potential for further SG&A expense reductions remains a strategic priority.

Furthermore, HireQuest, Inc. maintains a solid financial position with $2.2 million in cash and a $33.4 million available credit line. The company continues to pay quarterly dividends of $0.06 per share.

For additional insights into HireQuest, Inc., explore Exploring HireQuest, Inc. (HQI) Investor Profile: Who’s Buying and Why?

HireQuest, Inc. (HQI) Growth Opportunities

For investors eyeing growth, HireQuest, Inc. (HQI) presents several compelling opportunities rooted in strategic initiatives and market dynamics. Here's a detailed look into the key factors driving HQI's potential for expansion.

Analysis of Key Growth Drivers:

• Strategic Acquisitions: HQI's growth strategy heavily relies on acquiring other staffing firms. These acquisitions allow HQI to expand its market presence and service offerings rapidly. For example, acquiring companies specializing in specific industries or geographic regions can provide immediate access to new markets and clients.
• Franchise Model: The franchise-based model is a significant growth driver. It enables rapid expansion with reduced capital expenditure compared to a company-owned model. Franchisees, motivated by their own investment, often drive business development more aggressively.
• Market Expansion: There is substantial opportunity for HQI to grow its footprint across the United States. By targeting regions with growing economies and industries, HQI can strategically increase its revenue base.
• Service Diversification: While HQI primarily focuses on temporary staffing, expanding into related services such as permanent placement, executive search, and HR consulting can unlock new revenue streams and enhance client relationships.

Future Revenue Growth Projections and Earnings Estimates:

While specific revenue growth projections and earnings estimates can fluctuate based on market conditions and company performance, several factors suggest a positive trajectory for HireQuest, Inc.

Here is a table with potential projections:

Strategic Initiatives or Partnerships That May Drive Future Growth:

• Technology Investments: Investing in technology to streamline operations, enhance candidate matching, and improve client service can drive efficiency and growth. This includes AI-powered recruitment tools and integrated platforms for managing staffing processes.
• Partnerships with Educational Institutions: Collaborating with vocational schools and universities can create a pipeline of qualified candidates, addressing a critical need in the staffing industry. These partnerships can also enhance HQI's reputation and attract more clients.
• Government Contracts: Pursuing government contracts at the federal, state, and local levels can provide a stable revenue stream and enhance HQI's market position.
• Expansion of Franchise Network: Actively recruiting and supporting new franchisees in untapped markets is crucial. Offering comprehensive training, marketing support, and technology tools can attract high-quality franchisees and accelerate growth.

Competitive Advantages That Position the Company for Growth:

• Franchise Model: This model allows for rapid, capital-efficient expansion, differentiating HQI from competitors that rely solely on company-owned branches.
• Diversified Service Offerings: While specializing in temporary staffing, the ability to offer related services provides a competitive edge by meeting a broader range of client needs.
• Strong Brand Recognition: Building a strong brand through consistent service quality and effective marketing can attract both clients and franchisees.
• Experienced Management Team: A capable management team with a proven track record in the staffing industry is essential for navigating market challenges and capitalizing on growth opportunities.

These elements collectively paint a picture of HireQuest, Inc. as a company poised for continued growth. By focusing on strategic acquisitions, leveraging its franchise model, and capitalizing on market opportunities, HQI aims to enhance its financial performance and deliver value to investors.

To gain a broader understanding of HireQuest, Inc.'s (HQI) financial health, consider exploring Breaking Down HireQuest, Inc. (HQI) Financial Health: Key Insights for Investors.