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Kodiak Gas Services (KGS): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q2 2026, to Jun 30, 2026, filed Aug 7, 2026; rules v1.1
Kodiak Gas Services (KGS): 1 rule of 10 triggered on the filings to Jun 30, 2026: FCF growth = the business improved. 2 to review; 2 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
FCF growth = the business improved Triggered · severity medium · confidence medium
Free cash flow rose $293M, from −$9M to $284M, but working capital released $161M more cash than the year before and capital expenditure fell by $21M: 62% of the increase came from sources that need not repeat. Operating cash flow before working capital rose by $110M.
Innocent reading: An expansion programme finished, so capex fell back to maintenance levels for good.
Adjusted profit = economic profit To review · confidence low
Adjusted EPS was 10% or more above GAAP in 2 of the last 3 quarters: read the reconciliation before taking the adjusted figure.
A precise DCF value = the true value To review · confidence high
The DCF's point value is 19.48 a share (price 41.67); 86% of it is the terminal value, a number about years no one has seen. Moving wacc by ±1 pt alone takes it from 11.18 to 31.92; across every method the research ran the range is -5 to 132. The value is a range; the decimals are not information.
Innocent reading: A stable, mature business with a narrow range of outcomes, where the point value is a fair summary.
Every rule
A01 FCF growth = the business improved Triggered severity medium · confidence medium
Free cash flow rose $293M, from −$9M to $284M, but working capital released $161M more cash than the year before and capital expenditure fell by $21M: 62% of the increase came from sources that need not repeat. Operating cash flow before working capital rose by $110M.
The figures and how they are read
| Fiscal year before | FY2024 |
| Fiscal year | FY2025 |
| Operating cash flow, year before | $328M |
| Operating cash flow | $600M |
| Capex, year before | $337M |
| Capex | $315M |
| Free cash flow, year before | −$9M |
| Free cash flow | $284M |
| Change in FCF | $293M |
| Change in capex | −$21M |
| Working capital: change in its cash contribution | $161M |
| Of which: capex cut | $21M |
| Of which: working capital released | $161M |
| Share of the increase that need not repeat | +62.3% |
| Operating cash flow before working capital: change | 110469000.00 |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY2025 (cash flow statement, fiscal year) · FY2024 (cash flow statement, fiscal year before)
What would explain it innocently
- An expansion programme finished, so capex fell back to maintenance levels for good
- Suppliers agreed longer payment terms in a contract
- Inventory was brought down after a glut and will stay down
What to look for in the filing
- Maintenance capex (what it costs to keep the assets working)
- Supplier payment terms and any supply-chain financing
- Management's capex guidance for next year
What would show the trap does not apply
- Next year's FCF holds or rises with capex back at its earlier level and working capital no longer releasing cash
- The 10-K's capex guidance and the segment capex show the cut is a completed programme, not deferral
- The working-capital release matches a disclosed change in terms or a divestiture, not stretched payables or a collection push
Look again: next filing.
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 1.9% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY2025 |
| Stock compensation | $25M |
| Revenue | $1.3B |
| SBC / revenue | +1.9% |
| Buybacks | $104M |
| Buybacks / SBC | 4.2 |
| Diluted shares, year before | 85.2M shares |
| Diluted shares | 88.5M shares |
| Diluted shares: change | +3.9% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY2025 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Not triggered confidence medium
Receivables grew 17% against revenue 21% in Q2 2026; DSO 58 against a median of 67: collections are keeping pace with sales.
The figures and how they are read
| Quarter | Q2 2026 |
| Revenue, year over year | +21.1% |
| Receivables, year over year | +16.9% |
| Quarter before | Q1 2026 |
| Revenue y/y, quarter before | +4.9% |
| Receivables y/y, quarter before | -6.0% |
| Days sales outstanding | 58.3 |
| DSO, median of eight quarters | 67.4 |
| Receivables | $263M |
| Revenue | $391M |
receivables and revenue against the same quarter a year earlier; DSO = receivables / quarterly revenue × days, against the median of the eight quarters before
Source: Q2 2026 (receivables and revenue) · Q2 2025 (the same quarter a year earlier)
B08 Adjusted profit = economic profit To review confidence low
Adjusted EPS was 10% or more above GAAP in 2 of the last 3 quarters: read the reconciliation before taking the adjusted figure.
The figures and how they are read
| Quarter / adjusted EPS / GAAP EPS / gap | 2025-09-30 / 0.1553 / -0.17 / 2.095; 2026-03-31 / 0.59 / 0.2 / 0.661; 2026-06-30 / 0.55 / 0.53 / 0.036 |
| Quarters with adjusted ≥ 10% above GAAP | 2 |
| Quarters compared | 3 |
| Latest gap | +3.6% |
the analysts' 'actual' (usually the company's adjusted EPS) against GAAP net income ÷ diluted shares for the matching quarter; a gap of 10% or more counts (the stand-in until three releases' reconciliation tables are on file)
Source: 2025-09-30 (adjusted 0.16 vs GAAP -0.17) · 2026-03-31 (adjusted 0.59 vs GAAP 0.20) · 2026-06-30 (adjusted 0.55 vs GAAP 0.53)
What would show the trap does not apply
- The reconciliation shows the excluded items ending (a restructuring with its final charge, a settlement paid) and the gap to GAAP closes in the next quarters
- The excluded items are only amortisation of acquired intangibles and the cash paid for the deals is in the investing cash flow
Look again: next filing.
C02 Low net debt = no refinancing risk Not triggered confidence medium
$395K comes due within a year, 360.9× covered by cash and investments of $138M plus $5M of free cash flow.
The figures and how they are read
| Cash and investments | $138M |
| Debt | $2.7B |
| Net debt | $2.6B |
| Due within a year | $395K |
| Read from | the debt maturity table |
| Free cash flow, twelve months | $5M |
| Cash plus free cash flow | $143M |
| Coverage of what is due | 360.9 |
| Due in the second year | 0 |
| Balance sheet date | 2026-06-30 |
due within a year from the maturity table (else the current portion of debt), against cash and investments plus free cash flow over the last twelve months (zero if negative); no credit lines assumed
Source: FY2025 (debt maturities, cash and investments)
D03 EPS growth = profit growth Not triggered confidence high
EPS rose 22% and net income rose 32% in Q2 2026; the share count rose 7.5%: EPS growth follows profit growth.
The figures and how they are read
| Quarter | Q2 2026 |
| Quarter before | Q2 2025 |
| EPS, year before | $0.44 |
| EPS | $0.54 |
| Net income, year before | $39M |
| Net income | $52M |
| Diluted shares, year before | 90.0M shares |
| Diluted shares | 96.8M shares |
| EPS growth | +22.3% |
| Net income growth | +31.6% |
| Diluted shares: change | +7.5% |
| eps from profit | $0.14 |
| eps from share count | -$0.04 |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q2 2026 (net income, diluted shares, EPS) · Q2 2025 (the same quarter a year earlier)
E02 Low P/E at a cyclical peak = undervalued Not triggered confidence medium
Net income of $81M is not at a cyclical high against the last eight years (median $81M, best $181M): the P/E of 50.1× is on a normal year.
The figures and how they are read
| market value | $4.0B |
| net income ttm | $81M |
| pe ttm | 50.10 |
| net income median fy | $81M |
| pe mid cycle | 50.10 |
| net income peak fy | $181M |
| years | FY2021 / 181.0; FY2022 / 106.0; FY2023 / 20.0; FY2024 / 50.0; FY2025 / 81.0 |
| down years in window | 2 |
P/E on the trailing twelve months' net income against the P/E on the median net income of the last eight fiscal years (a mid-cycle stand-in); 'at a peak' = this year's profit at or above 90% of the best year and at least 1.3× the median
Source: Q2 2026 (net income, trailing twelve months)
E07 A precise DCF value = the true value To review confidence high
The DCF's point value is 19.48 a share (price 41.67); 86% of it is the terminal value, a number about years no one has seen. Moving wacc by ±1 pt alone takes it from 11.18 to 31.92; across every method the research ran the range is -5 to 132. The value is a range; the decimals are not information.
The figures and how they are read
| dcf value | 19.48 |
| price | 41.67 |
| terminal value share | +86.4% |
| swing by input | WACC / ±1 pt / 11.18 / 31.92; Revenue growth (each year) / ±5 pts / 10.26 / 30.55; Operating margin / ±3 pts / 13.6 / 25.35; Tax rate / ±5 pts / 15.73 / 23.22 |
| range all methods | -4.7; 132.47 |
the DCF's point value against the share of it that is the terminal value and the value at each input moved by one step (growth ±5 pts, WACC ±1 pt, margin ±3 pts …); the range across every method the research ran
Source: 2026-11-08 (valuation research)
What would explain it innocently
- A stable, mature business with a narrow range of outcomes, where the point value is a fair summary
- The inputs that matter most are themselves well known (a regulated return, a long contract)
What to look for in the filing
- Which input you believe differs from the research's and why
- What the price implies for growth (the reverse DCF on the fair-value page)
What would show the trap does not apply
- The DCF's value is robust to the terminal growth and discount rate (the range's low end is still above the price)
- The company's cash flows over the next three years track the DCF's early years
Look again: next filing.
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → Kodiak Gas Services: cash flow →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.