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Natural Gas Services Group Inc

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Natural Gas Services Group Inc AI Insights

Informational only. Not investment advice.
As of 2026-01-21

Snapshot

  • FCF TTM is -43.0M despite 58.5M operating cash flow - capex of 101.5M (61% of revenue) signals aggressive fleet expansion phase.[Free Cash Flow TTM]
  • Operating margin 22.5% TTM vs industry median 6.7% - 3.4x advantage from equipment rental model with high utilization.[Operating Margin TTM]
  • EPS 5Y growth 93% vs industry median 14% - margin expansion driving outsized earnings growth on modest 22% revenue growth.[EPS Growth 5Y TTM]

Watch Triggers

  • Capital Expenditure TTM: Falls below 50M (maintenance level)Signals transition from growth to harvest phase, FCF inflection point
  • Interest Expense TTM: Exceeds 15M or 20% of EBITDebt service consuming too much operating profit, refinancing risk
  • Operating Margin TTM: Falls below 18%Utilization decline or pricing pressure would invalidate margin thesis

Bull Case

Operating leverage is exceptional: 22.5% operating margin on 167M revenue with 43% EBITDA margin. As capex normalizes to maintenance levels (~35M), FCF could swing to +25M annually.

Operating Margin TTMEBITDA TTMCapital Expenditure TTM

Revenue 3Y CAGR of 25% outpaces industry median 3.5% by 7x, with EPS growth 93% showing operating leverage converts to shareholder returns.

Total Revenue 3Y GrowthEPS Growth 5Y TTM

Bear Case

Debt of 208M at 0.77x equity with 12.5M interest expense consumes 67% of net income. Rising rates or utilization drop could stress coverage.

Total DebtDebt to EquityInterest Expense TTM

Zero cash buffer with negative FCF (-43M) and 23M working capital leaves no margin for operational disruption or demand downturn.

Cash and EquivalentsFree Cash Flow TTMWorking Capital

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
55%

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Forward Thesis

Capex cycle peaks in 12-18 months, converting -43M FCF to positive as fleet matures

1-3ymed
  • Capex at 61% of revenue unsustainable long-term
  • PPE of 502M now generating 167M revenue (33% asset yield)
  • Operating cash flow of 58M proves underlying profitability
Capex TTM 101.5M vs depreciation 35.3MEBITDA margin 43% covers debt serviceDebt/equity 0.77 still manageable

Valuation Context

Caveats

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Fundamental company data provided by Morningstar, updated daily.

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