Kodiak Gas Services, Inc. (KGS): Among Stocks with Insanely High PE Ratios Insiders Are Selling
We recently published a list of . In this article, we are going to take a look at where Kodiak Gas Services, Inc. (NYSE:KGS) stands against other stocks with insanely high PE ratios insiders are selling.
The U.S. stock market has turned into a theater of extremes right now. Growth stocks are seeing an abnormal price hike, but in some cases, it is almost proportionately met with the insiders cashing out. The flood of insider sales in companies trading at unbelievable price-to-earnings (PE) ratios has become the prime example of what would happen when euphoria crashes with caution.
But why are corporate executives – the insiders who know the company best- selling shares when investors are piling in on them? Let's connect the dots.
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Growth stocks continue to be at the center of attraction in 2025. They have been outperforming their value counterpart over the past decade, fueled by declining interest rates and increasing bets on innovation. Even when the Fed hiked the rates in 2023, growth stocks strived under pressure, with some sectors continuing to command premium valuations.
Many of these companies are now trading at PE ratios that even optimistic analysts could not justify. For that reason, insiders are selling, and they are doing it aggressively.
Retail investors chase fast-paced moments while corporate executives and major stakeholders pull their investments from the company. Data from the SEC's Form 4 filings reveal that insider sales for high-PE firms have increased recently, reflecting a widening gap between Wall Street's optimism and Main Street's reality.
It is yet to be decided whether these sales are a vote of no confidence in the insanely high valuations or simply prudent profit-taking. To answer this, we need to look at the broader economic environment. Recently, President Trump proposed a $163 billion budget cut, which involves slashing domestic programs while concentrating on defense and border security. The reduced funding for housing, education, and healthcare could hurt consumer spending, and hence, the cut has introduced fresh uncertainty into a market where investors are already scrambling due to interest rate and tariff rate uncertainties.
On the other hand, the Treasury bond market is also flashing warning signs. According to a report by Reuters, two-year yields have declined to 3.57%, nearly a full percentage point below the Fed's benchmark rate. Treasury Secretary Scott Bessent calls the gap a clear signal for rate cuts. When we look back at history, we will see that these dislocations usually preceded economic slowdowns, and in such an environment, the high PE stocks that could not meet the inflated expectations with their earnings will fall.
That said, high PE ratios are not always bad. They often reflect the market's confidence in the company's future growth. But when insiders start to dump the stocks amid geopolitical disturbances and rate cut debates, we cannot help but wonder whether this is calm before a storm. And it is here we must exercise caution. From our picks, you could see a red flag or a buying opportunity. However, one thing is clear. In today's market, ignoring the warning signs could be the riskiest move.
We have followed a few criteria when putting together our list of 10 stocks with unbelievably high PE ratios, being sold by insiders. All the stocks in the list have a PE ratio of 35 or more, which defines the term insanely-high for our article. We have further reduced the number of stocks to 10 by considering only those with an insider selling of 5% change or more in the last 6 months. This is to ensure that the potential investors are aware of the change in institutional mindset for stocks with an upward-trending PE ratio. Based on this insider selling, our picks have been ranked from 10 to 1. All the data in the article was taken from financial databases and analyst reports, with all information updated as of May 05, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().
A close-up of a large industrial compressor in the oil and gas industry.
Texas-based company, Kodiak Gas Services, Inc. (NYSE:KGS), is a leader in contract compression services for the oil and gas industry across the U.S. The company specializes in large-horsepower natural gas compression and supports upstream and midstream operations. Amid tough competitors like Archrock and USA Compression Partners, Kodiak Gas Services, Inc. (NYSE:KGS) differentiates itself through operational reliability, scale, and customer service. Challenges, however, like changes in natural gas production levels, infrastructure investment, and energy transition policies, continue to affect the company's performance. It is among the stocks that insiders are selling.
Reaching $1.2 billion in the fourth quarter of 2025, Kodiak Gas Services, Inc. (NYSE:KGS) has achieved a 36% growth in total revenue, offering some justification for its abnormal pricing. The successful integration of the CSI acquisition has allowed for cost savings that surpassed the initial expectations. On the other hand, the 5% sequential decline in Q4 revenue owing to the divestiture of low-margin non-core horsepower is raising concerns. Labor constraints in the Permian Basin and supply chain constraints, including establishing shops for building compressors and managing equipment delivery times, also affect the company's operational performance.
Kodiak Gas Services, Inc. (NYSE:KGS) exhibits a high P/E ratio of 58.67, suggesting a potentially overvalued stock. The investors' concern is high, with insider selling standing at 29.52%, announcing a notable number of insider withdrawals from the company. Together, these values signal that those with intimate company knowledge find it difficult to justify the current price.
Overall, KGS ranks 10th on our list of stocks with insanely high PE ratios insiders are selling. While we acknowledge the potential of KGS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than KGS but that trades at less than 5 times its earnings, check out our report about this .
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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