USA Compression (USAC) AI Stock Analysis

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USA Compression

(NYSE:USAC)

Rating:66Neutral

Price Target:

$26.00

▲(5.78% Upside)

The overall score reflects strong earnings call sentiment and financial recovery, tempered by technical analysis signals and valuation concerns. The company's high leverage and negative equity are significant risks, but strong demand projections and operational efficiency gains provide a positive outlook.

Positive Factors

Future Orders

USAC expects to order new units to be placed in service and is already working on building a 2026 order book.

Operational Outlook

The strength of USAC's operational outlook is driven by strong utilization and tariff growth trajectory, leading to raised estimates.

Negative Factors

Deleveraging Constraints

Still wood to chop on deleveraging, which remains a constraint on 2024/2025 outlook.

Growth Messaging Clarity

USAC's messaging around growth has been less clear and at times contradictory, which is highlighted by the partnership's marked underperformance against AROC/KGS over the past year.

USA Compression (USAC) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$2.99B

Dividend Yield8.62%

Average Volume (3M)158.96K

Price to Earnings (P/E)36.7

Beta (1Y)0.55

Revenue Growth8.22%

EPS Growth28.05%

CountryUS

Employees854

SectorEnergy

Sector Strength43

IndustryOil & Gas Equipment & Services

Share Statistics

EPS (TTM)0.22

Shares Outstanding122,683,945

10 Day Avg. Volume182,154

30 Day Avg. Volume158,955

Financial Highlights & Ratios

PEG Ratio0.11

Price to Book (P/B)96.24

Price to Sales (P/S)2.81

P/FCF Ratio19.57

Enterprise Value/Market Cap1.84

Enterprise Value/Revenue5.60

Enterprise Value/Gross Profit19.39

Enterprise Value/Ebitda11.68

Forecast

1Y Price Target

$27.00

Price Target Upside9.85% Upside

Rating ConsensusHold

Number of Analyst Covering6

USA Compression Business Overview & Revenue Model

Company DescriptionUSA Compression Partners, LP, a growth-oriented Delaware limited partnership that provides natural gas compression services in terms of total compression fleet horsepower. The company offers compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil, as well as operates stations. It primarily focuses on providing natural gas compression services to infrastructure applications, including centralized natural gas gathering systems and processing facilities. The company was founded in 1998 and is headquartered in Austin, Texas.

How the Company Makes MoneyUSA Compression generates revenue primarily through the rental and sale of its compression equipment. The company offers long-term and short-term rental agreements to oil and gas producers, which provides a steady stream of income. Additionally, USAC earns revenue from maintenance and service contracts associated with its equipment, ensuring optimal performance for its clients. Key revenue streams include fees from leasing compression units, particularly in high-demand areas, and the provision of specialized services tailored to customer needs. Strategic partnerships with major energy producers and operators enhance USAC's market position and contribute significantly to its earnings, as these collaborations often lead to long-term contracts and recurring revenue.

USA Compression Earnings Call Summary

Earnings Call Date:Jul 17, 2025

(Q2-2025)

% Change Since: 4.15%|

Next Earnings Date:Nov 04, 2025

Earnings Call Sentiment Positive

The earnings call indicates a generally positive outlook for USA Compression Partners, with record revenues and strong demand projections outweighing concerns about flat horsepower growth and rising costs. Operational efficiency gains and industry awards further contribute to the positive sentiment.

Q2-2025 Updates

Positive Updates

Record-Setting Quarter for Revenues

USA Compression Partners delivered a record-setting quarter for revenues and average revenue per horsepower while maintaining consistent margins and utilization.

Strong Demand Projections

Contracted horsepower in the Northeast is expected to be 5% higher in Q4 compared to Q2, indicating strong demand and positive outlook for the rest of the year.

Natural Gas Growth Projections

EIA short-term energy outlook shows considerable natural gas growth projections, including annualized gas growth of 6% in the Permian.

Operational Efficiency Gains

Significant savings in lube oil costs anticipated due to a new agreement, and ongoing benefits from the new shared services model with Energy Transfer.

Safety and Operational Excellence Award

Employees in the Rockies received a Safety and Operational Excellence award from one of the top 10 customers, highlighting strong operational performance.

Negative Updates

Flat Average Revenue-Generating Horsepower

Average revenue-generating horsepower remained flat on a sequential quarter basis and up only 1% from a year ago.

Increased Labor Costs

Labor costs increased in the quarter due to overtime and contract labor, but efforts are underway to reduce these costs with internal hires.

Higher Expansion Capital Expenditures

Second quarter expansion capital expenditures were $18.1 million, primarily for reconfiguration make-ready capital of existing units.

Rising Equipment Costs

Significant increases in equipment costs from suppliers like Caterpillar, with no signs of prices reducing in the near term.

Company Guidance

During the second quarter of 2025 earnings call, USA Compression Partners provided updated guidance and discussed key metrics. The company achieved record revenues and average revenue per horsepower while maintaining consistent margins and utilization. Their contracted horsepower in the Northeast is projected to increase by 5% in Q4 compared to the current period, reflecting strong demand. The second quarter adjusted gross margins stood at 65.4%, with a net income of $28.6 million and operating income of $76.6 million. They reported net cash provided by operating activities of $124.2 million and a cash interest expense of $45.4 million. The leverage ratio is currently at 4.08x. For 2025, they reaffirmed their guidance with adjusted EBITDA expected to range between $590 million and $610 million, distributable cash flow between $350 million and $370 million, and capital expenditures for expansion and maintenance between $120 million to $140 million and $38 million to $42 million, respectively. The company anticipates significant growth in natural gas demand, driven by AI, cloud services, and new data center investments. They have acquired approximately 48,000 new horsepower in 2025 and expect active horsepower to exceed 3.6 million by Q4, setting a new company record.

USA Compression Financial Statement Overview

Summary

USA Compression shows strong revenue recovery and profitability improvements, with significant cash flow generation. However, negative equity and high leverage pose risks that need addressing for long-term stability.

Income Statement

Positive

The income statement shows a strong recovery with a consistent increase in revenue from $632.6M in 2021 to $966.4M in TTM 2025. The gross profit margin improved to 38.8% in TTM 2025, indicating effective cost management. The net profit margin also increased to 10%, reflecting enhanced profitability. However, the EBIT margin of 30.8% and EBITDA margin of 48.3% suggest room for further efficiency improvements.

Balance Sheet

Neutral

The balance sheet reveals a concerning negative stockholders' equity of -$11.9M in TTM 2025, indicating potential financial instability. The debt-to-equity ratio is not meaningful due to negative equity, highlighting high leverage. Despite this, the company has managed to maintain a substantial asset base of $2.7B, suggesting potential for future recovery if debt levels are managed.

Cash Flow

Positive

Cash flow analysis shows a strong operating cash flow of $330M in TTM 2025, supporting the company's operations. Free cash flow has grown significantly to $205.5M, indicating improved cash generation capabilities. The operating cash flow to net income ratio is robust, suggesting efficient conversion of income into cash. However, the high capital expenditures could pose a risk if not managed carefully.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	981.22M	950.45M	846.18M	704.60M	632.64M	667.68M
Gross Profit	283.40M	372.97M	315.37M	233.59M	199.49M	222.78M
EBITDA	470.20M	560.03M	485.65M	406.06M	379.85M	-225.40M
Net Income	91.89M	99.58M	68.27M	30.32M	10.28M	-594.73M
Balance Sheet
Total Assets	2.67B	2.75B	2.74B	2.67B	2.77B	2.95B
Cash, Cash Equivalents and Short-Term Investments	0.00	14.00K	11.00K	35.00K	-18.55M	2.00K
Total Debt	0.00	2.51B	2.35B	2.12B	1.99B	1.95B
Total Liabilities	0.00	2.72B	2.55B	2.78B	2.77B	2.13B
Stockholders Equity	0.00	27.76M	183.05M	-116.30M	578.42M	814.96M
Cash Flow
Free Cash Flow	281.50M	136.48M	33.36M	126.37M	220.21M	184.13M
Operating Cash Flow	357.57M	341.33M	271.88M	260.59M	265.43M	293.20M
Investing Cash Flow	-95.69M	-202.01M	-232.65M	-129.94M	-39.19M	-105.10M
Financing Cash Flow	-261.88M	-139.32M	-39.26M	-130.61M	-226.24M	-188.11M

USA Compression Technical Analysis

Technical Analysis Sentiment

Positive

Last Price24.58

Price Trends

50DMA

24.19

Positive

100DMA

24.22

Positive

200DMA

23.81

Positive

Market Momentum

MACD

-0.04

Negative

RSI

54.97

Neutral

STOCH

82.29

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For USAC, the sentiment is Positive. The current price of 24.58 is above the 20-day moving average (MA) of 23.81, above the 50-day MA of 24.19, and above the 200-day MA of 23.81, indicating a bullish trend. The MACD of -0.04 indicates Negative momentum. The RSI at 54.97 is Neutral, neither overbought nor oversold. The STOCH value of 82.29 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for USAC.

USA Compression Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NGS	79 Outperform	$313.81M	17.57	7.00%	0.40%	14.77%	34.74%
KGS	76 Outperform	$3.04B	39.00	6.16%	4.96%	31.01%	39.51%
LBRT	75 Outperform	$1.85B	8.76	10.92%	2.72%	-9.32%	-48.26%
AROC	73 Outperform	$4.22B	18.17	19.85%	3.19%	28.22%	49.17%
USAC	66 Neutral	$2.99B	36.71	314.74%	8.62%	8.22%	28.05%
Sector *	62 Neutral	€552.25M	7.26	9.58%	2.57%	6.16%	-53.64%
WTTR	59 Neutral	$989.37M	25.55	4.18%	3.40%	-2.46%	-44.11%

* Energy Sector Average

Performance Comparison

USAC

USA Compression

24.36

4.57

23.09%

AROC

Archrock

24.01

5.75

31.49%

NGS

Natural Gas Services Group

25.59

6.78

36.04%

WTTR

Select Energy Services

8.34

-2.28

-21.47%

LBRT

Liberty Oilfield Services

11.41

-8.33

-42.20%

KGS

Kodiak Gas Services, Inc.

34.90

10.53

43.21%

USA Compression Corporate Events

Business Operations and Strategy

USA Compression Engages at Citi Natural Resources Conference

Neutral

Aug 7, 2025

On August 12, members of USA Compression‘s senior management attended the Citi Natural Resources Conference, engaging with the investment community. Presentation materials from these meetings were made available on the company’s website, reflecting USA Compression’s ongoing commitment to investor relations and transparency.