Because looking at P/E alone is putting a blinder over other aspects of the company which are not great:
The good:
Company is putting money into R&D (2019 increase of $1.5 million over 2018) and has come up with some new IP in the last 12 months in the IOT and AI fields.
Liabilities are decreasing, down from 37.8 million end of 2018 to 32.6 million end of 2019.
Operating expenses are decreasing (not taking into account R&D)
EPS is getting better (-1.37 in 2019 vs -2.20 in 2018)
The company doesn’t need money at the moment, so no near-term dilution expected
The valuation is low compared to its peers:
• Taking REKR as an example: REKR has a -0.47 EPS in 2019 but 5x as many OS vs OMQS, it’s EPS would be 100% lower than OMQS if the share counts were the same. REKR has much lower revenues & wider operating loss, and financially is not well. OMQS has ¼ of its market cap - OMQS should be at least 4x the current price.
The bad:
New tech does not seem to have gained much traction in the market
Company is still listed on OTC. Having a Nasdaq listing would help immensely with awareness and share price.
Total revenue in 2019 passed 2018 by a small margin, however, there was consecutive quarterly revenue decline from Q1 through to Q4 of 2019 ($18.62 million Q1 vs $11.35 miilion Q4).
Despite revenue dropping in every quarter, cost of revenue and total operating expenses remain high; gross profit and net income have been dropping the whole year. While some of the increase in expenses is due to R&D, sales must ramp up and the gross profit margin needs to be higher. Management has been promising they have been focusing on improving the profit margin for years now.
Due to year after year of sustained income losses, retained earnings are now at -45 million.
It has been 1.5 years since Quest acquired HTS and the benefits have not translated to their balance sheet. IF management can increase revenues while continuing to lower expenses, and improve on their profit margin, the company can inch back towards profitability. Once that happens, stabilizing their financials will come easier. I have been holding shares of this company for years, and like you still hold hope. OMQS’ portfolio of IOT and AI products is impressive - they have what it takes to make progress!
