Kinetik Holdings Inc. Class A Common Stock (KNTK) fair value

ACCE thesis

Kinetik Holdings runs natural gas gathering, processing, compression and transportation assets in the Permian Basin, plus a growing set of midstream systems in the Delaware and Midland basins that move gas and natural gas liquids to market. Its moat is physical: dedicated acreage commitments and long-lived pipeline and processing infrastructure are hard and slow to replicate, and the Permian's continued production growth keeps the throughput flowing into them. The near-term driver is the build-out of new processing capacity and the connection of volumes that come on as producers drill, which is what sustains the 36.3% revenue growth in the data. At a 19.4x trailing and 21.4x forward P/E, with a 19.2% ROE and a 23.0% operating margin, the stock trades at a reasonable multiple for a business growing this fast, though the forward P/E sitting above the trailing one signals the market expects earnings to lag near-term spending. It is worth a deeper look to test whether the revenue growth is durable volume growth or partly acquisition-driven, and how much of the expansion capex has yet to convert into cash flow.