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8
Questor Technology could be a $5.00 stock (again)
Posted by: Gerry Wimmer
4/8/2018
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Questor Technology’s (TSXV: QST) record-breaking financial results for 2017 are the prelude of what is to come for the Company and its shareholders in 2018.




Note: Investorfile's share price accumulation target of $0.65 for Questor Technology Inc. was reached on June 3, 2013. For the record, we do not revise share price targets for our Top Ideas - Small Cap Value Stocks. We have positioned our blog to be one of the first providers for a pragmatic perspective of a small cap company stock's potential worth, where there may be uncovered value that has been largely overlooked by the investment community.


In our last blog post about Questor Technology (See: The stars are aligning for Questor Technology and its clean-tech solutions) which is one of our long-standing Top Ideas, we put forward the question as to whether the stock price could reclaim its all-time closing high of $5.00 in the future and, based on Questor’s recent momentum, we could see it happening in 2018. Given the record-breaking financial results for 2017 and outlook for this year, our stock price forecast looks more likely than ever.

Questor Technology Inc. (TSXV: QST - $3.23) is a leading provider of waste gas combustion incineration solutions to improve air quality. The Company's proprietary incinerator technology--which is safe, reliable and very efficient--is deemed a best-of-breed clean-air solution for oil and gas producers needing to comply with stricter emission regulations. To date, the Company's incinerators have been deployed all over the United States and Canada, as well as in many other countries worldwide.

We highlight that the Company’s revenues in 2017 were the highest ever to date at C$19.5 million, an increase of 175% from the prior year. The bulk of the revenue growth was a mix of high-margin incinerator rentals, up 256% to C$11.4 million in 2017, and a 97% increase in incinerator sales to $C6.5 million during the same year. As a result of the record sales levels, Questor reported that adjusted EBITDA jumped significantly to C$8.2 million, driving bottom line profitability to C$0.14 per share on a fully diluted basis for the year. Despite an aggressive capital spending budget, the Company still ended the year with plenty of cash and debt-free.

Questor has said that 2017 was a pivotal year which validated the Company’s strategy to move more of its rental fleet of incinerators to the USA (where there is enforcement of waste emission regulations for oil and gas fields most notably in the state of Colorado)and to introduce and implement an innovative hybrid incineration technology.The Company’s hybrid incineration technology allows its oil and gas customers to purchase a base level of capacity and rent additional capacity to meet the shorter-term demands of high initial production. The benefits are lower capital and operating costs, reduced lease footprint and clean enclosed combustion to meet stringent emission regulations.

Other States in the USA are in the process of implementing similar rules to those in Colorado to deal with emissions, with particular focus on methane gas reduction. The Company has said that "by utilizing Questor’s patented clean combustion technology, our clients eliminate their methane emissions and reduce the GHG emission impact nine-fold.” In Colorado, Questor has already demonstrated that its technology cost effectively deals with methane emissions and other hazardous air pollutants.

We took a closer look at Questor’s fourth quarter results for 2017 as a barometer of what is to come in 2018. Adjusting for a one-time charge, the Company earned about C$0.08 per share in earnings in Q4. Given the ever- increasing demand for Questor’s green solutions and that the Company announced that its 2018 capital budget of $10 million will be used primarily to expand its US Operations for additional proprietary rental emission control equipment, we think there is plenty of upside to Questor’s financial results this year. We estimate that the Company could earn about C$0.40 per share in 2018.

Based our analysis and, using a conservative stock multiple (13x), we conclude that Questor Technology’s stock price this year could hit the C$5.00 dollar mark, which is about 55% upside from its current trading levels.

Questor Technology has approximately 26.4 million shares outstanding.

The Company’s website www.questortech.com.

Author Ownership Disclosure: TSXV: QST- YES


Read Disclaimer:

This article is for informational purposes only. This article is based on the author's independent analysis and judgment and does not guarantee the information's accuracy or completeness. The information contained in this article is subject to change without notice, and the author assumes no responsibility to update the information contained in this article. The information contained within this article should not be construed as offering of investment advice. Those seeking direct investment advice, should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock.

Investorfile.com is not engaged in an investor relations agreement with Questor Technology Inc. nor has it received any compensation from Questor Technology Inc. for the preparation or distribution of this article.

The author of this article has acquired and may trade shares of Questor Technology Inc. through open market transactions and for investment purposes only.

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Hi Gerry, Your philosophy is focused on principles that have been shown to produce above average results over time and your record has clearly proven that. Congratulations on a great blog and thank you for the hard work that you do in sharing and updating your ideas; it is much appreciated.