NGS

NGS has executed a genuine operational turnaround. Revenue has more than doubled in four years ($72M→$172M) and the business swung from losses (-$9.2M in FY2021, -$569K FY2022) to $19.9M net income (+15.7%) in FY2025, with operating income of $37.3M and a 21.6% operating margin. The MD&A backs the numbers: average horsepower utilization climbed to 83.6% from 81.8% and 78.2%, rented horsepower rose to 562,676 from 491,756, and the deliberate shift toward larger 400–2,500 HP packages for centralized Permian facilities is working. Rental — billed monthly in advance with maintenance included and mid-50s-to-low-60s% gross margins — is a durable, recurring revenue base, and ~78% Permian / ~90% oil-linked exposure ties NGS to the most economic U.S. basin.

The catch is the price and the cash. At $39.46 the stock trades at 25.1x FY2025 EPS of $1.57 and 2.9x sales — a full multiple for a cyclical oil-services name whose own filing stresses that demand 'typically' falls in periods of low oil prices and that E&P capital budgets are 'meaningfully restrained' by investor spending discipline. Return on equity is a thin 7.3%, so the market is already paying up for growth that isn't yet generating high returns on capital. Meanwhile the fleet build is being funded aggressively: capex leapt 69% to $121M against operating cash flow of just $62.9M (down 5.3%), so free cash flow is deeply negative (~-$58M). Cash fell to $0.00, total liabilities jumped 31.4% to $312M, and liabilities/equity rose to 1.14x — the growth is increasingly debt-financed.