Kodiak Gas (KGS) Surges 11.6%: Is This an Indication of Further Gains?

Kodiak Gas Services (KGS) shares soared 11.6% in the last trading session to close at $47.31. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 18% gain over the past four weeks.

The surge follows Kodiak Gas’s announcement of its $690 million acquisition of Distributed Power Solutions (DPS). DPS provides highly reliable distributed power solutions across a diverse set of customers and end markets. The deal marks a strategic expansion for Kodiak beyond its core natural gas compression business into behind-the-meter power. DPS brings 384 MW of power generation assets, consisting of a mix of Caterpillar reciprocating engines and turbines. The acquisition is expected to complement Kodiak’s existing operations, with Kodiak’s Caterpillar-certified technicians enhancing fleet reliability and unlocking meaningful operational synergies. Importantly, the transaction expands Kodiak’s exposure to high-growth end markets such as data centers, positioning the company to benefit from rapidly rising data center power demand and supporting more stable, contracted cash flows. This strategic acquisition of distributed power generation assets strengthens Kodiak’s growth profile and provides access to high-demand data center markets, supporting more stable and growing cash flows.

This provider of oil and gas infrastructure services is expected to post quarterly earnings of $0.67 per share in its upcoming report, which represents a year-over-year change of +148.2%. Revenues are expected to be $334.77 million, up 8.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Kodiak Gas, the consensus EPS estimate for the quarter has been revised 1% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on KGS going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Kodiak Gas belongs to the Zacks Oil and Gas - Mechanical and and Equipment industry. Another stock from the same industry, Natural Gas Services (NGS), closed the last trading session 0.6% higher at $34.77. Over the past month, NGS has returned 0.4%.

Natural Gas Services' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.37. Compared to the company's year-ago EPS, this represents a change of +27.6%. Natural Gas Services currently boasts a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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