Waste and recycling services provider Quest Resource (NASDAQ: QRHC) reported Q2 CY2026 results beating Wall Street’s revenue expectations, with sales up 7.6% year on year to $64.07 million. Its GAAP loss of $0.57 per share was significantly below analysts’ consensus estimates.

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Company Overview

Recycling corporate waste to help companies be more sustainable, Quest Resource (NASDAQ: QRHC) is a provider of waste and recycling services.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Quest Resource’s 15% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Quest Resource’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 6.8% over the last two years.

This quarter, Quest Resource reported year-on-year revenue growth of 7.6%, and its $64.07 million of revenue exceeded Wall Street’s estimates by 0.8%.

Looking ahead, sell-side analysts expect revenue to grow 7% over the next 12 months. While this projection implies its newer products and services will spur better top-line performance, it is still below average for the sector.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Quest Resource was roughly breakeven when averaging the last five years of quarterly operating profits, inadequate for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Analyzing the trend in its profitability, Quest Resource’s operating margin decreased by 6.1 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Quest Resource’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q2, Quest Resource generated an operating margin profit margin of negative 15.6%, down 16.3 percentage points year on year. Since Quest Resource’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Quest Resource, its EPS declined by 65.1% annually over the last five years while its revenue grew by 15%. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into Quest Resource’s earnings to better understand the drivers of its performance. As we mentioned earlier, Quest Resource’s operating margin declined by 6.1 percentage points over the last five years. Its share count also grew by 4.1%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Quest Resource, its two-year annual EPS declines of 62.6% show it’s still underperforming. These results were bad no matter how you slice the data.

In Q2, Quest Resource reported EPS of negative $0.57, down from negative $0.09 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Quest Resource to improve its earnings losses. Analysts forecast its full-year EPS will improve from negative $0.82 to negative $0.15.

Key Takeaways from Quest Resource’s Q2 Results

We were impressed by how significantly Quest Resource blew past analysts’ EBITDA expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its EPS missed. Zooming out, we think this was a mixed quarter. The stock remained flat at $1.27 immediately following the results.

So do we think Quest Resource is an attractive buy at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).