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HireQuest, Inc. (HQI)
:HQI
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HireQuest
(NASDAQ:HQI)
Rating:63Neutral
Price Target:
$10.00
▼(-0.40%Downside)
Positive Factors
Expense Management
Management was pleased with the continuation of solid profitability in the quarter despite revenue headwinds, which the company attributed to the strength and resiliency of its franchise business model and a continued focus on expense management.
Merger Proposal
HireQuest intends to initiate a shareholder direct tender offer that will present the merger proposal directly to TrueBlue’s shareholders.
Negative Factors
Franchise Royalty Fees
Franchise royalty fees accounted for 93% of Q1/25 revenue and declined -11.1% YOY to $7.0 million, lower than our estimate of $7.7 million.
Revenue Decline
Total revenue (including service revenue) was down -11.2% YOY to $7.5 million, lower than our estimate of $8.2 million and the consensus of $8.0 million.
Sales Trends
Softer sales trends in Q1/25 were reflective of the challenging environment that has impacted the staffing industry over the last two-plus years.
HireQuest (HQI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$140.56M
Dividend Yield2.39%
Average Volume (3M)15.03K
Price to Earnings (P/E)41.2
Beta (1Y)0.54
Revenue Growth-7.66%
EPS Growth-34.08%
CountryUS
Employees92
SectorIndustrials
Sector Strength91
IndustryStaffing & Employment Services
Share Statistics
EPS (TTM)0.10
Shares Outstanding14,000,000
10 Day Avg. Volume9,696
30 Day Avg. Volume15,025
Financial Highlights & Ratios
PEG Ratio-5.53
Price to Book (P/B)2.13
Price to Sales (P/S)0.00
P/FCF Ratio9.69
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue1.02
Enterprise Value/Gross Profit4.28
Enterprise Value/Ebitda4.51
Forecast
1Y Price Target
$13.00Price Target Upside29.48% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
HireQuest Business Overview & Revenue Model
Company DescriptionHireQuest, Inc. (HQI) is a publicly traded staffing and workforce solutions provider operating primarily in the temporary staffing sector. The company specializes in connecting businesses with a flexible workforce through its network of franchised offices across the United States. HireQuest offers a range of staffing services, including temporary labor, industrial staffing, and permanent placement solutions, catering to industries such as construction, hospitality, light industrial, and healthcare.
How the Company Makes MoneyHireQuest generates revenue primarily through its franchising model, where it licenses its brand and business systems to independent operators who run local staffing offices. The company earns money by receiving royalty fees from these franchisees, typically based on a percentage of the franchisee's gross billings. Additionally, HireQuest may earn revenue from providing back-office support services, such as payroll processing and risk management, to its franchisees. Significant growth in revenue can be attributed to strategic acquisitions and expanding its franchise network, which increases the company's geographical footprint and market reach.
HireQuest Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -1.08%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a challenging quarter for HireQuest, with declines in revenue and profitability metrics due to macroeconomic headwinds. However, the company is optimistic about its M&A pipeline and benefits from stricter immigration enforcement, with strong expense management contributing to profitability. Despite the negative financial results, strategic initiatives and franchise model resilience provide a positive outlook.Q1-2025 Updates
Positive Updates
Strong M&A Pipeline
HireQuest has a strong M&A pipeline and is encouraged by the many opportunities in the market, allowing for expansion into new geographic regions and market verticals more quickly than through organic growth.
Progress in Expense Management
The company reports consistent reductions in SG&A expenses on a year-over-year basis, supporting their expense management goals.
Benefit from Immigration Enforcement
More stringent immigration laws are increasing demand for HireQuest's services as an E-Verify employer, providing new business opportunities.
Successful CFO Transition Plan
David Hartley will succeed Steve Crane as CFO, bringing extensive financial experience and having been the main architect of over 15 acquisitions.
Positive Franchise Model Impact
Despite industry challenges, HireQuest maintains solid margins and profitability due to their franchise model, which positions them well for sustained long-term growth.
Negative Updates
Revenue Decline
Total revenue for Q1 2025 was $7.5 million, a decrease of 11.2% from $8.4 million in the same quarter last year.
Decrease in Franchise Royalties and Service Revenue
Franchise royalties decreased from $7.8 million to $7 million, and service revenue decreased from $588,000 to $512,000 compared to the same quarter last year.
Decline in System-Wide Sales
System-wide sales for Q1 2025 were $118.4 million, down from $134 million in Q1 2024.
Lower Profitability Metrics
Net income after tax decreased to $1.4 million from $1.6 million, and adjusted EBITDA was $2.8 million compared to $3.4 million in the prior-year period.
Continued Macroeconomic Headwinds
The staffing industry continues to face macroeconomic headwinds, causing employers to slow or suspend hiring decisions.
Company Guidance
During the first quarter of 2025, HireQuest reported total revenue of $7.5 million, representing an 11.2% decrease compared to the previous year's first quarter revenue of $8.4 million. Franchise royalties, the company's primary revenue source, contributed $7 million, down from $7.8 million the prior year. Service revenue also decreased to $512,000 from $588,000. Despite these declines, the company maintained profitability with a net income of $1.4 million, or $0.10 per diluted share, compared to $1.6 million, or $0.12 per diluted share, in the same quarter of 2024. Adjusted net income was $1.8 million, or $0.13 per diluted share, down from $2 million, or $0.15 per diluted share. Adjusted EBITDA stood at $2.8 million, with an adjusted EBITDA margin of 37%, compared to 40% in 2024. The company highlighted successful cost management with a 6.5% reduction in SG&A expenses, totaling $5.3 million. Additionally, HireQuest's M&A pipeline remains robust, and the company is well-positioned to capitalize on acquisition opportunities, supported by a credit facility with $34.8 million available. The balance sheet reflects total assets of $93.7 million, including $2.1 million in cash and $42.2 million in net accounts receivable.HireQuest Financial Statement Overview
Summary
HireQuest demonstrates a strong financial foundation with impressive profitability metrics and cash flow generation. While revenue growth has been a concern recently, the company's low leverage and effective cash management position it well for future opportunities.Income Statement
HireQuest has demonstrated strong gross and net profit margins, with a TTM gross profit margin of 100% due to its unique revenue recognition. The EBIT and EBITDA margins are solid, though there has been a noticeable decline in revenue and net income from 2023 to 2024. The company experienced a revenue contraction year-over-year, which could be a concern if it persists.75
Positive
Balance Sheet
The balance sheet reflects a healthy equity position with an equity ratio of 69.9% as of TTM. The debt-to-equity ratio is low, mitigating financial risk. However, there is a trend of increasing liabilities which could impact future leverage. Return on equity remains strong, indicating efficient use of shareholder funds.70
Positive
Cash Flow
HireQuest has shown robust operating cash flows, with a strong free cash flow generation. The operating cash flow to net income ratio indicates effective cash conversion. However, fluctuations in cash flows related to investing and financing activities suggest variability in capital management strategies.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 33.65M | 34.60M | 37.88M | 30.95M | 22.76M | 13.81M | Gross Profit |
| 33.65M | 34.60M | 37.88M | 28.91M | 22.59M | 13.81M | EBIT |
| 3.75M | 4.37M | 10.64M | 16.04M | 7.66M | 4.98M | EBITDA |
| 7.37M | 7.86M | 11.96M | 16.28M | 9.20M | 6.71M | Net Income Common Stockholders |
| 3.42M | 3.67M | 6.13M | 12.46M | 11.85M | 5.36M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.34M | 2.22M | 1.34M | 3.05M | 1.26M | 13.67M | Total Assets |
| 105.58M | 94.01M | 103.83M | 103.28M | 77.35M | 49.10M | Total Debt |
| 14.77M | 6.92M | 14.77M | 16.54M | 3.24M | 0.00 | Net Debt |
| 13.42M | 4.70M | 13.42M | 13.49M | 1.98M | -13.67M | Total Liabilities |
| 42.85M | 29.21M | 41.09M | 45.03M | 30.62M | 12.73M | Stockholders Equity |
| 62.73M | 64.80M | 62.73M | 58.25M | 46.73M | 36.36M |
| Cash Flow | Free Cash Flow | ||||
| 14.50M | 12.22M | 10.13M | 15.40M | 15.41M | 9.12M | Operating Cash Flow |
| 14.93M | 12.04M | 10.62M | 16.88M | 17.38M | 10.88M | Investing Cash Flow |
| 147.00K | 44.00K | -7.08M | -23.57M | -29.45M | 36.37K | Financing Cash Flow |
| -14.49M | -11.21M | -5.24M | 8.49M | -347.17K | -1.44M |
HireQuest Technical Analysis
Neutral
10.04
Price Trends
10.35
Negative
11.92
Negative
12.91
Negative
Market Momentum
-0.11
Negative
50.73
Neutral
75.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HQI, the sentiment is Neutral. The current price of 10.04 is above the 20-day moving average (MA) of 9.69, below the 50-day MA of 10.35, and below the 200-day MA of 12.91, indicating a neutral trend. The MACD of -0.11 indicates Negative momentum. The RSI at 50.73 is Neutral, neither overbought nor oversold. The STOCH value of 75.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HQI.
HireQuest Risk Analysis
HireQuest disclosed 43 risk factors in its most recent earnings report. HireQuest reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
HireQuest Peers Comparison
Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | $4.51B | 12.29 | 5.40% | 248.53% | 4.14% | -12.41% | |
63 Neutral | $115.54M | 268.89 | -7.21% | ― | -7.42% | -567.61% | |
63 Neutral | $140.56M | 41.22 | 5.67% | 2.39% | -7.66% | -34.08% | |
61 Neutral | $76.59M | 37.26 | 2.52% | ― | 3.93% | ― | |
60 Neutral | $48.43M | ― | -3.95% | 4.69% | -12.93% | -159.19% | |
54 Neutral | $193.82M | ― | -36.98% | ― | -16.76% | -1127.93% | |
49 Neutral | $21.34M | ― | -70.70% | ― | -17.38% | -1165.13% |
* Industrials Sector Average
Performance Comparison
HQI
HireQuest
10.04
-2.28
-18.51%
DHX
DHI Group
2.37
0.27
12.86%
JOB
GEE Group
0.20
-0.13
-39.39%
MHH
Mastech Holdings
6.51
-0.89
-12.03%
TBI
Trueblue
6.49
-4.08
-38.60%
BGSF
BGSF
4.36
-2.38
-35.31%
HireQuest Corporate Events
Dividends
HireQuest Declares Quarterly Cash Dividend Announcement
Positive
May 16, 2025
On May 16, 2025, HireQuest, Inc. announced that its Board of Directors declared a quarterly cash dividend of $0.06 per share, payable on June 16, 2025, to shareholders of record as of June 2, 2025. This decision reflects the company’s ongoing commitment to returning value to its shareholders, although the declaration of future dividends will depend on the company’s financial performance, cash needs, and other factors.
The most recent analyst rating on (HQI) stock is a Buy with a $16.00 price target. To see the full list of analyst forecasts on HireQuest stock, see the HQI Stock Forecast page.
M&A TransactionsBusiness Operations and Strategy
HireQuest Proposes Acquisition of TrueBlue for $7.50/Share
Positive
May 13, 2025
On May 13, 2025, HireQuest, Inc. announced a proposal to acquire all outstanding shares of TrueBlue, Inc. for $7.50 per share, representing a 61% premium over TrueBlue’s closing price on May 12, 2025. The acquisition aims to leverage HireQuest’s franchising model to enhance profitability and shareholder value, addressing TrueBlue’s declining revenues and share price. Despite previous rejections from TrueBlue’s management, HireQuest is pursuing the acquisition to create a stronger, higher-margin company with significant growth prospects.
The most recent analyst rating on (HQI) stock is a Buy with a $16.00 price target. To see the full list of analyst forecasts on HireQuest stock, see the HQI Stock Forecast page.
Executive/Board ChangesBusiness Operations and Strategy
HireQuest Announces CFO Retirement and Successor
Neutral
Apr 8, 2025
On April 8, 2025, HireQuest, Inc. announced the retirement of its Chief Financial Officer, Steve Crane, effective May 31, 2025. David Hartley, who has been with the company since 2020 and currently serves as Vice President of Operational Finance and Corporate Development, will succeed Crane. Hartley’s appointment is part of a planned transition, with Crane assisting in the process to ensure continuity. The company believes Hartley’s experience and leadership will support its growth strategy and shareholder value.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.