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Kodiak Gas Services, Inc. (KGS)
NYSE:KGS
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Kodiak Gas Services, Inc.
(NYSE:KGS)
67Neutral
Positive Factors
Acquisition Synergies
The acquisition of CSI Compressco LP provides upside potential through cost synergies, contract alignment, and leveraging Aftermarket Services.
Demand and Supply
Kodiak Gas Services is expected to continue benefiting from tight supply, strong demand tailwinds, and margin expansion.
Negative Factors
Earnings Expectations
KGS reported a slight miss on its FY25 outlook compared to Mizuho estimates.
Growth Capex
A third of the growth capex sum will not be allocated to new units, so expected HP additions of ~150-155k was below the ~175k forecast.
Market Volatility
Kodiak Gas Services has underperformed recently due to oil macro concerns and broader market volatility.
Kodiak Gas Services, Inc. (KGS) vs. S&P 500 (SPY)
Market Cap
$2.95B
Dividend Yield5%
Average Volume (3M)1.33M
Price to Earnings (P/E)59.5
Beta (1Y)1.11
Revenue Growth36.33%
EPS Growth83.52%
CountryUS
Employees1,300
SectorEnergy
Sector Strength45
IndustryOil & Gas Equipment & Services
Share Statistics
EPS (TTM)0.58
Shares Outstanding87,934,690
10 Day Avg. Volume1,443,984
30 Day Avg. Volume1,334,271
Financial Highlights & Ratios
PEG Ratio0.71
Price to Book (P/B)N/A
Price to Sales (P/S)2.87
Price to Cash Flow (P/CF)7.00
P/FCF Ratio8.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$46.14Price Target Upside43.20% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
Kodiak Gas Services, Inc. Business Overview & Revenue Model
Company DescriptionKodiak Gas Services, Inc. operates contract compression infrastructure for customers in the oil and gas industry in the United States. It operates in two segments, Compression Operations and Other Services. The Compression Operations segment operates company-owned and customer-owned compression infrastructure to enable the production, gathering, and transportation of natural gas and oil. The Other Services segment provides a range of contract services, including station construction, maintenance and overhaul, and other ancillary time and material-based offerings. The company was formerly known as Frontier TopCo, Inc. Kodiak Gas Services, Inc. was founded in 2010 and is based in Montgomery, Texas. Kodiak Gas Services, Inc. operates as a subsidiary of Frontier Topco Partnership, L.P.
How the Company Makes MoneyKodiak Gas Services, Inc. primarily makes money through long-term service contracts with oil and gas companies. These contracts involve the leasing and maintenance of compression equipment, which is crucial for the transportation and processing of natural gas. Revenue streams are largely driven by equipment rentals and associated maintenance services, which often include regular inspections, repairs, and technical support to ensure optimal performance. Additionally, Kodiak may engage in strategic partnerships with energy companies to enhance service offerings and expand market reach, contributing to its revenue growth. Other contributing factors to its earnings may include value-added services and potential expansion into related sectors or regions to capture new market opportunities.
Kodiak Gas Services, Inc. Financial Statement Overview
Summary
Kodiak Gas Services, Inc. has shown strong revenue growth and improved profitability. The balance sheet reflects reduced leverage and increased equity, enhancing financial stability. However, negative free cash flow due to high capital expenditures is a concern, requiring careful management to ensure sustainable growth.Income Statement
Kodiak Gas Services, Inc. has demonstrated strong revenue growth, increasing from $532.42 million in 2020 to $1.16 billion in 2024. The net profit margin improved from a negative margin in 2020 to 4.30% in 2024. However, the gross profit margin decreased from 38.97% in 2020 to 100% in 2024, likely due to reclassification of costs. EBIT and EBITDA margins remained strong, indicating efficiency in core operations.72
Positive
Balance Sheet
The company shows a reasonable equity base with stockholders' equity increasing from $755.29 million in 2020 to $1.37 billion in 2024, improving financial stability. However, the debt-to-equity ratio decreased significantly from 2.52 in 2020 to 0.04 in 2024, highlighting a substantial reduction in debt. ROE was positive at 3.63% in 2024, indicating profitability but with room for improvement.68
Positive
Cash Flow
Operating cash flow has been consistently positive, reaching $327.99 million in 2024, but free cash flow turned negative in the same year, at -$8.97 million, primarily due to high capital expenditures. The ratio of operating cash flow to net income is robust at 6.57 in 2024, showing strong cash generation relative to earnings.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.16B | 850.38M | 707.91M | 606.38M | 532.42M | Gross Profit |
| 1.16B | 316.64M | 440.56M | 396.20M | 207.47M | EBIT |
| 249.45M | 249.33M | 222.09M | 188.96M | 168.43M | EBITDA |
| 533.32M | 440.52M | 483.93M | 389.73M | 314.06M | Net Income Common Stockholders |
| 49.90M | 20.07M | 106.27M | 180.96M | -2.19M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.75M | 5.56M | 20.43M | 28.80M | 24.11M | Total Assets |
| 4.44B | 3.24B | 3.21B | 3.01B | 3.30B | Total Debt |
| 53.26M | 1.83B | 2.73B | 1.85B | 1.90B | Net Debt |
| 48.51M | 1.82B | 2.71B | 1.82B | 1.88B | Total Liabilities |
| 3.06B | 2.10B | 2.98B | 2.05B | 2.54B | Stockholders Equity |
| 1.37B | 1.14B | 229.09M | 960.07M | 755.29M |
| Cash Flow | Free Cash Flow | |||
| -8.97M | 46.53M | -39.50M | 48.04M | -53.41M | Operating Cash Flow |
| 327.99M | 266.33M | 219.85M | 249.98M | 243.98M | Investing Cash Flow |
| -292.47M | -218.42M | -251.38M | -202.03M | -296.38M | Financing Cash Flow |
| -36.33M | -62.77M | 23.17M | -43.25M | 73.71M |
Kodiak Gas Services, Inc. Technical Analysis
Negative
32.22
Price Trends
39.73
Negative
40.87
Negative
34.60
Negative
Market Momentum
-0.98
Negative
44.35
Neutral
31.92
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KGS, the sentiment is Negative. The current price of 32.22 is below the 20-day moving average (MA) of 36.08, below the 50-day MA of 39.73, and below the 200-day MA of 34.60, indicating a bearish trend. The MACD of -0.98 indicates Negative momentum. The RSI at 44.35 is Neutral, neither overbought nor oversold. The STOCH value of 31.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KGS.
Kodiak Gas Services, Inc. Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $1.07B | 7.91 | 10.07% | ― | 49.31% | 10605.17% | |
79 Outperform | $238.00M | 13.22 | 7.02% | ― | 29.36% | 261.48% | |
78 Outperform | $3.92B | 21.27 | 15.49% | 3.12% | 16.89% | 55.94% | |
73 Outperform | $957.67M | 18.27 | 3.68% | ― | 5.34% | ― | |
70 Outperform | $2.70B | 32.02 | 94.47% | 9.15% | 12.32% | 247.77% | |
67 Neutral | $2.95B | 59.46 | 3.84% | 5.00% | 36.33% | 83.52% | |
57 Neutral | $7.44B | 4.21 | -3.75% | 6.64% | -0.07% | -64.77% |
* Energy Sector Average
Performance Comparison
KGS
Kodiak Gas Services, Inc.
32.54
7.21
28.46%
INVX
Innovex International
15.18
-6.09
-28.63%
AROC
Archrock
22.80
3.54
18.38%
HLX
Helix Energy
6.51
-4.60
-41.40%
NGS
Natural Gas Services Group
18.52
-5.44
-22.70%
USAC
USA Compression
23.72
0.73
3.18%
Kodiak Gas Services, Inc. Earnings Call Summary
Earnings Call Date: Mar 5, 2025 | % Change Since: -20.56% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call presented a positive outlook for Kodiak Gas Services, highlighting record-breaking financial performance, strategic divestitures, successful integration of acquisitions, and strong shareholder returns. Despite a decrease in fourth-quarter revenue and challenges in maintaining contract pricing, the company's strategic focus and investments in innovation and expansion provide a strong foundation for future growth.Highlights
Record Revenue and Growth
Kodiak Gas Services set new records in total revenue, adjusted EBITDA, discretionary cash flow, and free cash flow for 2024. Total revenue grew by 36% to $1.2 billion, and adjusted EBITDA increased by 39% to $610 million.
Strategic Divestitures and Focus on Core Operations
The company divested approximately 129,000 horsepower of non-core low margin units, increased the average horsepower size of its fleet, and focused operations in the U.S. and Mexico.
Successful Integration of CSI Acquisition
Kodiak exceeded initial acquisition synergy estimates by realizing over 50% more cost savings than expected and streamlined operations to focus on large horsepower compression.
Strong Shareholder Returns
Kodiak returned significant capital to shareholders with $139 million in dividends and distributions, and a 115% total shareholder return in 2024.
Expansion and Innovation Efforts
Investments were made in the organic growth of the fleet, development of cutting-edge training facilities, and the initial deployment of AI technology.
Lowlights
Decrease in Quarterly Revenue
Fourth quarter total revenues were approximately $310 million, down 5% sequentially due to divestitures of low margin non-core horsepower and seasonal slowdowns.
Challenges in Maintaining Contract Pricing
Average revenue per horsepower per month slightly decreased from Q3 to Q4, attributed to the impact of selling non-core horsepower.
Company Guidance
In the Fourth Quarter and Full Year 2024 Earnings Conference Call, Kodiak Gas Services provided detailed guidance for 2025, highlighting several key metrics. The company aims to achieve total revenue between $1.31 billion and $1.38 billion, with an adjusted EBITDA ranging from $685 million to $725 million, demonstrating continued confidence in their strategic execution. Kodiak plans to invest significantly in its fleet, with growth capital expenditures expected to be between $240 million and $280 million, targeting approximately 150,000 to 155,000 new horsepower. The company forecasts a contract services adjusted gross margin percentage of 66% to 68% and plans to return about 35% or more of discretionary cash flow to shareholders. Kodiak also aims to reduce leverage to 3.5 times by the end of 2025, emphasizing their commitment to maintaining a strong balance sheet while pursuing growth opportunities.Kodiak Gas Services, Inc. Corporate Events
DividendsFinancial Disclosures
Kodiak Gas Services Announces Dividend and Financial Results
Neutral
Feb 4, 2025
On February 3, 2025, Kodiak Gas Services, Inc. announced a quarterly cash dividend of $0.41 per share of common stock for the fourth quarter of 2024, payable on February 21, 2025, to shareholders of record as of February 14, 2025. Simultaneously, its subsidiary, Kodiak Gas Services, LLC, declared a similar distribution for its units. Additionally, Kodiak will release its fourth-quarter and full-year 2024 financial results on March 5, 2025, followed by a conference call on March 6, 2025.
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.