Natural Gas Services Group Inc (NYSE: NGS)

Sector: Energy Industry: Oil & Gas Equipment & Services CIK: 0001084991
Market Cap 464.16 Mn
P/B 1.71
P/E 24.83
P/S 2.61
ROIC (Qtr) 7.83
Div Yield % 0.00
Rev 1y % (Qtr) 2.66
Total Debt (Qtr) 208.00 Mn
Debt/Equity (Qtr) 0.77
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About

Investment thesis

Bull case

  • Strong tangible asset base of 562.31M provides 2.70x coverage of total debt 208M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 58.49M provides strong 25.07x coverage of stock compensation 2.33M, indicating sustainable incentive practices.
  • Strong operating cash flow of 58.49M provides 2.54x coverage of SG&A expenses 23.01M, showing efficient operational cost management.
  • Robust tangible asset base of 562.31M provides 24.23x coverage of working capital 23.20M, indicating strong operational backing.
  • Free cash flow of (43.01M) provides excellent 34.30x coverage of dividends (1.25M), indicating sustainable shareholder returns.

Bear case

  • Operating cash flow of 58.49M barely covers its investment activities of (101.58M), with a coverage ratio of -0.58, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 58.49M provides thin coverage of dividend payments of (1.25M) with a -46.64 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of (43.01M) provides weak coverage of capital expenditures of 101.50M, with a -0.42 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 36.67M show weak coverage of depreciation charges of 35.32M, with a 1.04 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of (43.01M) represents just -0.97x of debt issuance 44.34M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Product and Service Breakdown of Revenue (2021)

Peer comparison

Companies in the Oil & Gas Equipment & Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SLB Slb Limited/Nv 59.56 Bn 20.77 2.67 11.64 Bn
2 BKR Baker Hughes Co 59.13 Bn 22.85 2.13 6.09 Bn
3 FTI TechnipFMC plc 28.99 Bn 127.65 1.96 1.34 Bn
4 HAL Halliburton Co 28.83 Bn 22.47 1.30 8.13 Bn
5 WFRD Weatherford International plc 7.39 Bn 17.15 1.50 1.64 Bn
6 NOV NOV Inc. 7.09 Bn 48.90 0.81 2.34 Bn
7 VAL Valaris Ltd 6.32 Bn 15.83 2.61 1.09 Bn
8 KGS Kodiak Gas Services, Inc. 4.56 Bn 91.00 3.58 2.66 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.13 1.17
EV to Cash from Ops. EV/CFO 10.85 -3.30
EV to Debt EV to Debt 3.05 10.99
EV to EBIT EV/EBIT 17.30 4.49
EV to EBITDA EV/EBITDA 7.66 6.54
EV to Free Cash Flow [EV/FCF] EV/FCF -14.75 31.31
EV to Market Cap EV to Market Cap 1.37 1.36
EV to Revenue EV/Rev 3.56 2.02
Price to Book Value [P/B] P/B 1.71 1.73
Price to Earnings [P/E] P/E 24.83 20.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 14.91 0.42
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 5.49
Dividend per Basic Share Div per Share (Qtr) 0.00 0.26
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 6.68
Interest Coverage Int. cover (Qtr) 2.86 -10.19
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -23.05 -37.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -3.10 1,334.16
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 4.06
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 16.06 -12.71
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 7.38 19.66
EBIT Growth (1y) % EBIT 1y % (Qtr) 15.11 -26.68
EBT Growth (1y) % EBT 1y % (Qtr) 15.40 39.97
EPS Growth (1y) % EPS 1y % (Qtr) 16.28 27.30
FCF Growth (1y) % FCF 1y % (Qtr) -29.89 -867.31
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.87 5.49
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.32 0.74
Cash Payout Ratio Cash Payout (Qtr) 0.01 0.10
Cash Ratio Cash Ratio (Qtr) 0.41 0.62
Current Ratio Curr Ratio (Qtr) 1.84 2.25
Debt to Equity Ratio Debt/Equity (Qtr) 0.77 0.88
Interest Cover Ratio Int Coverage (Qtr) 2.86 -10.19
Times Interest Earned Times Interest Earned (Qtr) 2.86 -10.19
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 40.40 16.47
EBIT Margin % EBIT Margin % (Qtr) 20.59 -0.62
EBT Margin % EBT Margin % (Qtr) 13.38 4.39
Gross Margin % Gross Margin % (Qtr) 61.00 30.41
Net Profit Margin % Net Margin % (Qtr) 10.50 2.67