Critical Review: Summit Midstream (NYSE:SMC) versus Kodiak Gas Services (NYSE:KGS)

Kodiak Gas Services (NYSE:KGS) and Summit Midstream (NYSE:SMC) are both oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Risk and Volatility

Kodiak Gas Services has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, Summit Midstream has a beta of 2.37, meaning that its stock price is 137% more volatile than the S&P 500.

Earnings and Valuation

This table compares Kodiak Gas Services and Summit Midstream”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kodiak Gas Services	$850.38 million	4.88	$20.07 million	$0.29	163.28
Summit Midstream	$449.92 million	0.98	-$38.95 million	($12.81)	-3.24

Kodiak Gas Services has higher revenue and earnings than Summit Midstream. Summit Midstream is trading at a lower price-to-earnings ratio than Kodiak Gas Services, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for Kodiak Gas Services and Summit Midstream, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kodiak Gas Services	0	2	9	0	2.82
Summit Midstream	0	0	0	0	0.00

Kodiak Gas Services currently has a consensus target price of $39.36, suggesting a potential downside of 16.87%. Given Kodiak Gas Services’ stronger consensus rating and higher possible upside, equities analysts clearly believe Kodiak Gas Services is more favorable than Summit Midstream.

Profitability

This table compares Kodiak Gas Services and Summit Midstream’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kodiak Gas Services	2.23%	7.91%	2.63%
Summit Midstream	-23.01%	0.71%	0.22%

Institutional and Insider Ownership

25.0% of Kodiak Gas Services shares are held by institutional investors. Comparatively, 43.0% of Summit Midstream shares are held by institutional investors. 0.2% of Kodiak Gas Services shares are held by company insiders. Comparatively, 5.3% of Summit Midstream shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Kodiak Gas Services beats Summit Midstream on 11 of the 14 factors compared between the two stocks.

About Kodiak Gas Services

Kodiak Gas Services, Inc. operates contract compression infrastructure for customers in the oil and gas industry in the United States. It operates in two segments, Compression Operations and Other Services. The Compression Operations segment operates company-owned and customer-owned compression infrastructure to enable the production, gathering, and transportation of natural gas and oil. The Other Services segment provides a range of contract services, including station construction, maintenance and overhaul, and other ancillary time and material-based offerings. The company was formerly known as Frontier TopCo, Inc. Kodiak Gas Services, Inc. was founded in 2010 and is headquartered in The Woodlands, Texas.

About Summit Midstream

Summit Midstream Corporation focuses on owning, developing, and operating midstream energy infrastructure assets primarily shale formations in the continental United States. It operates natural gas, crude oil, and produced water gathering systems in four unconventional resource basins, including the Williston Basin in North Dakota, which includes the Bakken and Three Forks shale formations; the Denver-Julesburg Basin that consists of the Niobrara and Codell shale formations in Colorado and Wyoming; the Fort Worth Basin in Texas, which comprises the Barnett Shale formation; and the Piceance Basin in Colorado, which includes the Mesaverde formation, as well as the emerging Mancos and Niobrara Shale formations. It serves natural gas and crude oil producers. Summit Midstream Corporation was founded in 2012 and is based in Houston, Texas.