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Natural Gas Services Group (NGS)
NYSE:NGS

Natural Gas Services Group (NGS) AI Stock Analysis

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Natural Gas Services Group

(NYSE:NGS)

Rating:77Outperform
Price Target:
$30.00
▲(17.60%Upside)
Natural Gas Services Group's strong financial performance and strategic earnings call highlights are the most significant factors driving its score. Technical indicators suggest bullish momentum, though caution is warranted due to potential overbought conditions. Corporate events contribute positively by reinforcing strategic governance and growth plans.
Positive Factors
Earnings
NGS reported 1Q25 results above expectations and slightly increased the midpoint of 2025 EBITDA guidance.
Financial Performance
The higher adjusted gross margin led to 4Q24 EBITDA exceeding estimates, showing strong operational performance.
Negative Factors
Market Dependency
Demand for NGS’s compression services is closely linked to exploration and production activity levels and the price of natural gas.

Natural Gas Services Group (NGS) vs. SPDR S&P 500 ETF (SPY)

Natural Gas Services Group Business Overview & Revenue Model

Company DescriptionNatural Gas Services Group (NGS) is a leading provider in the energy sector, specializing in the fabrication, rental, and sale of natural gas compression equipment. The company caters primarily to the upstream and midstream segments of the oil and gas industry, offering essential equipment and services that facilitate the efficient extraction and transportation of natural gas. With a focus on innovation and customer service, NGS supports its clients in enhancing their operational capabilities and addressing their specific gas compression needs.
How the Company Makes MoneyNatural Gas Services Group generates revenue through multiple streams, primarily focusing on the rental and sales of natural gas compression equipment. The company's rental business involves leasing compression units to customers, which provides a steady and recurring revenue stream. This model allows customers to access necessary equipment without the upfront capital expenditure of purchasing, while NGS benefits from long-term rental agreements. Additionally, NGS sells new and used compression equipment, contributing to its revenue. The company also offers maintenance and support services, which enhance customer relationships and provide additional income. These revenue streams are supported by a strategy of maintaining a diverse fleet of equipment and fostering strong customer relationships, ensuring adaptability to market demands and conditions.

Natural Gas Services Group Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: 18.16%|
Next Earnings Date:Aug 18, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with record rental revenue, improved gross margins, and a solid balance sheet. However, concerns were noted regarding market volatility and increased SG&A expenses. Despite these challenges, the overall sentiment remains optimistic due to the company's strategic initiatives and financial resilience.
Q1-2025 Updates
Positive Updates
Record Rental Revenue
Rental revenue hit a quarterly record of $38.9 million, a 15% increase compared to the prior year quarter and 2% sequentially.
Adjusted EBITDA Achievement
Adjusted EBITDA of $19.3 million in the quarter, marking a record number.
Strong Balance Sheet
Finished the quarter at 2.18x leverage with significant margin of safety and organic growth potential.
High Adjusted Gross Margin
Adjusted rental gross margin of 61.9%, one of the highest levels achieved in the past decade.
Improved Days Receivable
Days receivable improved from 118 days a year ago to 35 days, maintaining this progress.
Expanded Credit Facility
In April, expanded revolving facility from $300 million to $400 million with improved terms.
Negative Updates
Volatile Commodity Markets
Market volatility observed with WTI prices fluctuating, creating potential uncertainty.
Net Income Decrease Year-over-Year
Net income for the quarter was $4.9 million, down from $5.1 million in the prior year period.
SG&A Expenses Increase
SG&A expenses rose by $0.7 million year-on-year to $5.4 million.
Company Guidance
During the first quarter 2025 earnings call for Natural Gas Services Group, guidance was provided indicating strong financial performance despite market volatility. Rental revenue reached a quarterly record of $38.9 million, reflecting a 15% year-over-year increase. The adjusted rental gross margin was 61.9%, while adjusted EBITDA was a record $19.3 million. The company maintained a leverage ratio of 2.18x, with significant available credit following the expansion of their revolving facility to $400 million. The CEO emphasized the continuation of robust market demand for compression, with 2025 unit deliveries on target and further growth expected in 2026. The company is focusing on asset utilization, fleet expansion, and M&A, with expectations for sustained performance and strategic investments in technology and partnerships to drive value creation.

Natural Gas Services Group Financial Statement Overview

Summary
Natural Gas Services Group demonstrates solid financial performance with strong revenue and profitability growth. The income statement shows impressive performance, the balance sheet is healthy with moderate leverage, and cash flows are robust, reflecting excellent cash generation capabilities.
Income Statement
85
Very Positive
The company shows strong revenue growth, with a significant increase from $68.06M in 2020 to $161.22M in TTM. The gross profit margin improved to 47.3% TTM, indicating efficient cost management. Net profit margin is healthy at 10.5% TTM, showcasing profitability. EBIT and EBITDA margins are robust at 20.8% and 35.5% respectively, illustrating operational efficiency.
Balance Sheet
78
Positive
The balance sheet is stable with an equity ratio of 51.9% TTM, indicating a strong equity base. The debt-to-equity ratio at 0.65 is moderate, suggesting controlled leverage. Return on equity is a decent 6.5% TTM, reflecting effective use of equity to generate profits. The balance sheet strength is supported by a consistent increase in stockholders' equity.
Cash Flow
82
Very Positive
The operating cash flow to net income ratio is 4.78 TTM, indicating strong cash flow generation compared to net income. Free cash flow grew significantly to $20.80M TTM from negative figures, reflecting improved cash management. The free cash flow to net income ratio of 1.22 TTM further supports the company's strong cash flow position.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue161.22M156.74M121.17M84.83M72.42M68.06M
Gross Profit76.28M56.64M32.16M14.35M1.66M7.43M
EBITDA57.24M64.94M37.25M24.44M13.68M22.23M
Net Income16.98M17.23M4.75M-569.00K-9.18M1.81M
Balance Sheet
Total Assets501.69M492.53M478.73M328.25M298.51M306.80M
Cash, Cash Equivalents and Short-Term Investments2.15M2.14M2.75M3.37M22.94M28.93M
Total Debt168.00M170.15M164.00M25.35M285.00K900.00K
Total Liabilities241.43M237.47M242.84M98.17M62.60M55.26M
Stockholders Equity260.26M255.06M235.89M230.08M235.91M251.54M
Cash Flow
Free Cash Flow20.80M69.15M-135.91M-37.36M2.82M17.39M
Operating Cash Flow81.24M66.46M18.03M27.76M28.53M32.65M
Investing Cash Flow-79.75M-71.44M-153.89M-65.08M-25.66M-15.16M
Financing Cash Flow-5.46M4.37M135.23M17.82M-8.85M-157.00K

Natural Gas Services Group Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price25.51
Price Trends
50DMA
23.63
Positive
100DMA
23.08
Positive
200DMA
23.52
Positive
Market Momentum
MACD
0.55
Positive
RSI
51.60
Neutral
STOCH
27.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NGS, the sentiment is Neutral. The current price of 25.51 is below the 20-day moving average (MA) of 25.90, above the 50-day MA of 23.63, and above the 200-day MA of 23.52, indicating a neutral trend. The MACD of 0.55 indicates Positive momentum. The RSI at 51.60 is Neutral, neither overbought nor oversold. The STOCH value of 27.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for NGS.

Natural Gas Services Group Peers Comparison

Overall Rating
UnderperformOutperform
Sector (52)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
NGNGS
77
Outperform
$319.64M18.856.77%22.64%78.46%
73
Outperform
$277.63M14.097.41%1.94%-7.56%30.51%
FTFTK
72
Outperform
$443.00M32.5012.80%11.97%188.31%
TTTTI
72
Outperform
$452.45M4.0555.55%-4.08%429.70%
OIOIS
59
Neutral
$348.32M64.940.75%-9.04%
FEFET
58
Neutral
$241.21M-32.34%7.31%-326.94%
52
Neutral
C$2.91B-1.09-3.26%6.12%5.32%-43.41%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
NGS
Natural Gas Services Group
25.51
5.95
30.42%
FTK
Flotek
14.84
10.26
224.02%
FET
Forum Energy Tech
19.50
3.69
23.34%
OIS
Oil States International
5.63
1.40
33.10%
TTI
Tetra Technologies
3.40
0.14
4.29%
RNGR
Ranger Energy Services
12.34
2.24
22.18%

Natural Gas Services Group Corporate Events

Executive/Board Changes
Natural Gas Services Group Appoints New Chairman
Positive
Jun 16, 2025

On June 16, 2025, Natural Gas Services Group announced the transition of Stephen C. Taylor from Chairman of the Board to Chairman Emeritus, with Donald J. Tringali appointed as the new Chairman. Taylor, who has been instrumental in the company’s growth and transformation over the past two decades, will continue to serve as a director. His leadership saw the expansion of NGS into a national compression platform with significant growth in EBITDA. The transition marks a significant milestone, positioning NGS for continued success with Tringali bringing valuable corporate governance experience to his new role.

The most recent analyst rating on (NGS) stock is a Buy with a $27.00 price target. To see the full list of analyst forecasts on Natural Gas Services Group stock, see the NGS Stock Forecast page.

Executive/Board ChangesShareholder Meetings
Natural Gas Services Group Holds Key Shareholder Meeting
Neutral
Jun 9, 2025

On June 5, 2025, Natural Gas Services Group held a shareholder meeting where several key proposals were voted on. The shareholders elected three directors for varying terms, approved executive compensation, amended the 2019 Equity Incentive Plan to increase shares and extend its term, and ratified the appointment of Ham, Langston & Brezina LLP as the independent registered public accounting firm for 2025.

The most recent analyst rating on (NGS) stock is a Buy with a $27.00 price target. To see the full list of analyst forecasts on Natural Gas Services Group stock, see the NGS Stock Forecast page.

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Natural Gas Services Group Reports Record Q1 Rental Revenue
Positive
May 14, 2025

Natural Gas Services Group reported a strong start to 2025, achieving record rental revenue of $38.9 million for the first quarter, a 15% increase from the previous year. The company maintained a robust competitive position despite market volatility, with all 2025 unit deliveries under long-term contracts and continued growth discussions for 2026. The company is focused on asset utilization, fleet expansion, and M&A to drive growth, with plans to monetize significant non-cash assets and expand its fleet with large horsepower units. Customer diversification remains a priority, with the largest customer accounting for 46% of revenue, down from 54% in 2024.

The most recent analyst rating on (NGS) stock is a Buy with a $27.00 price target. To see the full list of analyst forecasts on Natural Gas Services Group stock, see the NGS Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 17, 2025