Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

On Jul 18, Zacks Investment Research upgraded Natural Gas Services Group Inc. (NGS - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

This natural gas compression equipment and industrial flare systems provider delivered positive earnings surprises in two out of the last three quarters with an average beat of 14.9%.

Natural Gas Services is expected release its second quarter earnings results in the next month. Our earnings projection for the quarter is presently pegged at 28 cents, reflecting a projected year-over-year growth rate of 16.7%.

The company is doing well in its core rental business, which contributed 67% to the Natural Gas Services revenue in the first quarter. In addition, the 60-40 breakdown of its assets in dry gas and oil producing areas has added to its advantage. The rental contract received by the company in the first quarter is the highest since 2008.

Positive movements could also be noticed in oil shale installments, which will boost the rental business of the company. Presently about 40% of Natural Gas Services Group’s equipment is deployed in oil shales and liquids-oriented plays, up from about 1/3 of the fleet last quarter.

Moreover, the decision to expand its operation in other reserve rich basins has benefited the company and will continue to provide handsome returns going forward.

The present valuation of the company also makes it attractive. The forward price/earnings (P/E) multiple of 20.84x is lower than the peer group average of 22.86x, reflecting a discount of 8.9%. The Return on Equity (ROE) of the company is 7.6%, which is higher than the industry average of 6.5%.

Other Stocks to Consider

Besides Natural Gas Services Group, Dril-Quip, Inc. (DRQ - Analyst Report), FMC Technologies, Inc. (FTI - Analyst Report) and USA Compression Partners LP (USAC - Snapshot Report) also have a favorable Zacks Rank among others operating in the industry.  Dril-Quip currently has a Zacks Rank #1 (Strong Buy) while FMC Technologies and USA Compression Partners presently carry a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
BITAUTO HOLD BITA 34.02 +10.56%
CHINA DISTAN DL 15.00 +5.78%
E HOUSECHINA EJ 10.59 +5.27%
INTERNATIONA ICAGY 33.25 +5.22%
CANADIAN SOL CSIQ 26.40 +4.88%