Results: Natural Gas Services Group, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

It's been a good week for Natural Gas Services Group, Inc. (NYSE:NGS) shareholders, because the company has just released its latest second-quarter results, and the shares gained 5.0% to US$25.59. Revenues were US$41m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.41 were also better than expected, beating analyst predictions by 19%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, the current consensus from Natural Gas Services Group's three analysts is for revenues of US$170.6m in 2025. This would reflect a credible 4.0% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 2.9% to US$1.47. Before this earnings report, the analysts had been forecasting revenues of US$176.1m and earnings per share (EPS) of US$1.42 in 2025. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

See our latest analysis for Natural Gas Services Group

There's been no real change to the average price target of US$36.25, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Natural Gas Services Group at US$45.00 per share, while the most bearish prices it at US$32.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Natural Gas Services Group's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 8.1% growth on an annualised basis. This is compared to a historical growth rate of 21% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.2% annually. Even after the forecast slowdown in growth, it seems obvious that Natural Gas Services Group is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Natural Gas Services Group following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$36.25, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Natural Gas Services Group analysts - going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Natural Gas Services Group that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.