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Kodiak Gas Services: The Earnings Improved, but the Price Already Knows

Writer: Felix Ouma
Felix Ouma
Sep 18
9 min read

Post-Q2 2026 investment thesis update  |  Rating: HOLD  |  Base target: $69


Summary

  • Q2 revenue rose 21.1% to $391.1 Mn and adjusted EBITDA rose 21.7% to a record $216.8 Mn. Revenue beat consensus, but adjusted EPS of $0.55 missed the $0.67 estimate.


  • The core compression thesis strengthened: utilization reached 98.2%, pricing and revenue-generating horsepower increased, and adjusted gross margin held at 70.0%.


  • The DPS expansion is real, but it is capital hungry. Power produced $32.9 Mn of Q2 revenue at a 64.5% adjusted gross margin while total purchase commitments climbed to $2.5 Bn.

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  • I downgrade Kodiak from Strong Buy to Hold. My $69 base target offers 7.7% price upside, or about 10.8% including the current annualized dividend, which is not enough for the execution and financing risk.

Industrial plant with red tower, green buildings, blue pipes and tall silver stacks in a sunny rural field.
Source: Seeking Alpha

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