Kodiak Gas Services, Inc. (KGS)

Return on assets (ROA)

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Net income	US$ in thousands	49,895	20,066	106,265	180,963	-2,185
Total assets	US$ in thousands	4,435,120	3,244,110	3,205,540	3,011,600	3,295,830
ROA		1.12%	0.62%	3.32%	6.01%	-0.07%

December 31, 2024 calculation

ROA = Net income ÷ Total assets
= $49,895K ÷ $4,435,120K
= 1.12%

The analysis of Kodiak Gas Services, Inc.'s return on assets (ROA) over the specified period reveals notable fluctuations and trends.

At the end of 2020, the company experienced a negative ROA of -0.07%, indicating that it was not generating sufficient earnings relative to its total assets and possibly incurring losses or operating inefficiencies during that period. This negative figure suggests that the company's assets were not effectively utilized to produce profits in 2020.

In 2021, there was a significant turnaround as the ROA improved markedly to 6.01%. This increase signifies a substantial enhancement in the company's profitability relative to its total assets, reflecting better operational performance, increased revenues, or effective cost management.

The subsequent year, 2022, saw a decline in ROA to 3.32%. Although still positive and indicative of profitability, this reduction suggests a moderation in asset efficiency or a possible increase in asset base without a commensurate rise in earnings. The decline could be attributed to various factors such as increased operating costs, reduced margins, or investments in assets that have yet to generate proportional returns.

By the end of 2023, the ROA further decreased to 0.62%, approaching near break-even levels. This decline points to a diminished efficiency in asset utilization or profitability pressures, which could stem from market conditions, operational challenges, or increased competition impacting the company's earnings.

Looking into 2024, the ROA slightly increased to 1.12%. Although this indicates a marginal improvement, the figure remains relatively low compared to the peak in 2021. This suggests that while the company has made some progress in enhancing asset efficiency, it continues to face hurdles in achieving sustained higher profitability levels.

Overall, Kodiak Gas Services’ ROA profile demonstrates a period of instability and modest recovery after a negative asset return in 2020. The trend highlights the company's challenges in maintaining high profitability levels relative to its asset base, and ongoing efforts may be necessary to improve operational efficiency and earnings generation in the future.