Archrock (AROC) AI Stock Analysis

• Market Cap: $4.39B
• Dividend Yield: 3.06%
• Average Volume (3M): 1.12M
• Price to Earnings (P/E): 21.0
• Beta (1Y): 1.21
• Revenue Growth: 20.14%
• EPS Growth: 43.55%
• Country: US
• Employees: 1,300
• Sector: Energy
• Sector Strength: 68
• Industry: Oil & Gas Equipment & Services
• EPS (TTM): 0.40
• Shares Outstanding: 176,809,190
• 10 Day Avg. Volume: 1,202,198
• 30 Day Avg. Volume: 1,124,452
• PEG Ratio: 0.56
• Price to Book (P/B): 1.60
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -37.80
• Enterprise Value/Market Cap: 0.67
• Enterprise Value/Revenue: 0.65
• Enterprise Value/Gross Profit: 5.27
• Enterprise Value/Ebitda: 1.38
• 1Y Price Target: $30.80
• Price Target Upside: 25.41% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 78 Outperform
• Price Target: $28.00 ▲(14.01%Upside)

Archrock's strong earnings call and positive corporate events are the primary drivers of the high score. Financial performance shows growth but is tempered by high leverage and negative free cash flow. Technical analysis and valuation provide additional support, though not as strongly.

Positive Factors

Acquisition Impact

The acquisition of Natural Gas Compression Systems is expected to be immediately accretive to both EPS and cash available for dividend per share, with an estimated ~3% FY25 accretion pre-synergies.

Growth Prospects

AROC is supported by tailwinds for the broader compression industry with strong prospects of increasing demand from LNG exports and data center/AI power consumption.

Market Positioning

AROC is expected to exit the year with the largest outsourced compression fleet in the country, with over half of its operating horsepower located in the Permian.

Negative Factors

Market Perception

Despite outperforming Midstream-at-large on the update, it is believed that the Street may still underappreciate the significance of AROC's revamped growth appetite and peer-leading balance sheet/profitability metrics.

Reinvestment Risk

Management framed the higher capex outlook as a shift in focus now that it has optimized profitability metrics at its existing fleet and views the next leg of growth as driven by such unit additions.

Valuation Concerns

AROC's tilt towards large-HP compression has aligned its fleet with peers, making its valuation discount appear too punitive.

Archrock Business Overview & Revenue Model

Company Description

Archrock, Inc., together with its subsidiaries, operates as an energy infrastructure company in the United States. It operates in two segments, Contract Operations and Aftermarket Services. The company engages in the designing, sourcing, owning, installing, operating, servicing, repairing, and maintaining its owned fleet of natural gas compression equipment to provide natural gas compression services to customers in the oil and natural gas industry. It also offers various aftermarket services, such as sale of parts and components; and provision of operation, maintenance, overhaul, and reconfiguration services to customers who own compression equipment. The company was formerly known as Exterran Holdings, Inc. and changed its name to Archrock, Inc. in November 2015. Archrock, Inc. was founded in 1990 and is headquartered in Houston, Texas.

How the Company Makes Money

Archrock generates revenue primarily through its two main business segments: Contract Operations and Aftermarket Services. The Contract Operations segment is the largest revenue driver, involving long-term contracts where Archrock owns, operates, and maintains compression equipment for customers, charging them monthly service fees. This segment provides a stable and recurring revenue stream, as it typically involves multi-year agreements with energy companies. The Aftermarket Services segment includes the sale of parts and services for customers who own their compression equipment. This includes maintenance, repair, and overhaul services, which are essential for ensuring optimal equipment performance and reliability. Additionally, Archrock's strategic partnerships with oil and gas producers and transporters, as well as its large fleet of compression equipment and experienced workforce, further enhance its ability to secure and maintain long-term contracts, contributing significantly to its financial performance.

Archrock Financial Statement Overview

Summary

Archrock has shown strong revenue and profit growth with impressive margins, but high leverage and negative free cash flow are concerns.

Income Statement

Archrock has demonstrated impressive revenue growth with a 24.0% increase from 2023 to 2024 and a 6.8% rise in the TTM period. Gross profit margin stands at 45.1% for TTM, indicating effective cost management. Net profit margin improved to 16.4% TTM, up from 14.9% in 2024, reflecting enhanced profitability. The company's EBIT and EBITDA margins have also shown strength, standing at 33.4% and 49.8% respectively for TTM.

Balance Sheet

The debt-to-equity ratio is relatively high at 1.71, indicating a significant leverage level. However, the equity ratio of 34.0% suggests a stable equity base supporting the company's assets. Return on equity has improved to 15.0% TTM, showcasing better profitability from equity investments. Overall, while leverage is a concern, profitability metrics show positive trends.

Cash Flow

Operating cash flow to net income ratio is robust at 2.01 in the TTM period, reflecting strong cash generation relative to profits. However, free cash flow has turned negative due to capital expenditures exceeding cash flow from operations. This shift in free cash flow could constrain financial flexibility if continued.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.24B	1.16B	990.34M	845.57M	781.46M	874.97M
	Gross Profit
557.47M	505.90M	375.08M	261.82M	243.60M	304.64M
	EBIT
412.81M	366.77M	258.44M	-24.67M	-41.69M	4.28M
	EBITDA
615.82M	549.18M	423.30M	581.33M	506.01M	396.93M
	Net Income Common Stockholders
202.55M	172.23M	105.00M	44.30M	28.22M	-68.44M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.84M	4.42M	1.34M	1.57M	1.57M	1.10M
	Total Assets
3.96B	3.82B	2.66B	2.60B	2.59B	2.78B
	Total Debt
2.31B	2.21B	1.60B	1.56B	1.55B	1.71B
	Net Debt
2.31B	2.21B	1.60B	1.56B	1.55B	1.70B
	Total Liabilities
2.61B	2.50B	1.78B	1.74B	1.70B	1.84B
	Stockholders Equity
1.35B	1.32B	871.02M	860.69M	891.44M	935.56M
Cash Flow		Free Cash Flow
-19.90M	70.56M	11.55M	-36.42M	139.51M	194.98M
	Operating Cash Flow
407.52M	429.59M	310.19M	203.45M	237.40M	335.28M
	Investing Cash Flow
-1.24B	-1.16B	-232.49M	-130.92M	16.11M	-85.03M
	Financing Cash Flow
834.34M	733.55M	-77.92M	-72.54M	-253.03M	-252.84M

Archrock Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 24.56
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AROC, the sentiment is Negative. The current price of 24.56 is below the 20-day moving average (MA) of 25.17, above the 50-day MA of 24.28, and above the 200-day MA of 23.97, indicating a neutral trend. The MACD of 0.07 indicates Positive momentum. The RSI at 45.54 is Neutral, neither overbought nor oversold. The STOCH value of 11.78 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AROC.

Archrock Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AROC	78 Outperform	$4.39B	21.02	17.89%	3.06%	20.14%	43.55%
NGS	77 Outperform	$329.66M	19.44	6.77%	―	22.64%	78.46%
KGS	77 Outperform	$2.96B	63.99	3.88%	5.25%	45.41%	-37.84%
WFRD	72 Outperform	$3.85B	8.43	38.48%	1.88%	0.77%	1.69%
OII	71 Outperform	$2.15B	11.98	26.17%	―	10.04%	68.14%
USAC	64 Neutral	$2.97B	37.74	148.57%	8.32%	10.03%	65.28%
Sector *	58 Neutral	$7.55B	3.49	-4.45%	10.15%	0.79%	-49.51%

Archrock Corporate Events

Archrock Expands Credit Facility to Boost Flexibility

On May 16, 2025, Archrock, Inc. and its subsidiaries entered into a Second Amendment to their Amended and Restated Credit Agreement with JPMorgan Chase Bank and other financial institutions. This amendment increases the credit facility from $1.1 billion to $1.5 billion, with the potential to further increase it to $2.25 billion, enhancing Archrock’s financial flexibility and potentially impacting its operational capabilities and market positioning.

The most recent analyst rating on (AROC) stock is a Buy with a $24.00 price target. To see the full list of analyst forecasts on Archrock stock, see the AROC Stock Forecast page.

Archrock Updates Investor Presentation Materials Online

On May 6, 2025, Archrock, Inc. announced the posting of updated investor presentation materials on its website. This update is part of their ongoing efforts to provide transparency and information to investors, although the materials are not incorporated into any formal financial filings.

Archrock Completes Major Acquisition of NGCSE

On May 1, 2025, Archrock, Inc. completed its acquisition of Natural Gas Compression Systems, Inc. and NGCSE, Inc., enhancing its scale and operations in key regions. The transaction, valued at $299 million, is expected to be immediately accretive to Archrock’s 2025 earnings and strengthens its position as a premier provider of natural gas compression services in the U.S.