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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on AROC

Archrock's recent performance is driven by strong fundamentals, including a 52-week high, solid earnings growth, and a well-positioned compressor fleet. The company's Q3 results beat expectations, with contract operations revenues expected to range from $1.27 billion to $1.28 billion, supported by a healthy adjusted gross margin of 71-71.5%. Recent acquisitions and organic investments position Archrock for a record 2026, with forward valuation resetting to 8.5x EBITDA and strong FCF generation. Natural gas compression demand, high utilization, and escalating rental rates underpin robust margins and ongoing growth capital deployment.

1.c. Company Highlights

2. Archrock's Q3 2025 Earnings: Strong Performance and Optimistic Outlook

Archrock reported a robust third quarter 2025, with adjusted net income of $73 million or $0.42 per share, beating estimates of $0.41 per share. Revenue from contract operations came in at $326 million, up 2% compared to the second quarter of 2025, driven by growth in horsepower and pricing. The company achieved a quarterly adjusted gross margin percentage of 73%, with contract operations gross margin reaching 70.4%, slightly up from the prior quarter. As Brad Childers noted, "We've maintained utilization in the mid-90s range for the past 12 quarters, with stop activity year-to-date remaining at historically low levels."

Publication Date: Nov -10

📋 Highlights
  • Adjusted Gross Margin:: 73% in Q3, driven by pricing gains and cost management, with underlying contract operations gross margin at 70.4%.
  • Dividend Growth:: Quarterly dividend per share increased by 20% YoY, maintaining robust coverage of 3.7x.
  • Share Repurchases:: Repurchased 3.9M shares at $20.21 average price since 2023, totaling $78.8M invested.
  • Capital Expenditures:: 2025 growth CapEx narrowed to $345–355M, with $250M+ allocated for 2026 to meet demand.
  • Operational Efficiency:: Compressor time on location exceeded 6 years, a 64% improvement since 2021, with 90s utilization for 12 consecutive quarters.

Financial Performance

The company's financial performance was strong, with net income for the third quarter of 2025 at $71 million. Adjusted EBITDA was $221 million, driven by higher total adjusted gross margin dollars on a sequential and year-over-year basis. The company's leverage ratio stood at 3.1x, and dividend coverage was robust at 3.7x. The quarterly dividend per share was up 20% compared to a year ago.

Operational Highlights

Archrock's operational performance was excellent, with a younger and larger fleet positioned in competitive basins with high-quality customers. The average time a compressor stays on location is now more than 6 years, representing a 64% improvement since 2021. The company has a substantial contracted backlog and continues to book units for 2026 delivery to meet strong customer demand, particularly from the Permian Basin.

Valuation and Outlook

With a P/E Ratio of 16.18 and an EV/EBITDA of 9.03, the market is pricing in a certain level of growth. Analysts estimate next year's revenue growth at 6.4%. The company's dividend yield stands at 3.25%, and the free cash flow yield is 3.58%. Given Archrock's strong performance and optimistic outlook, the current valuation metrics suggest a reasonable price for the stock. The company's guidance for growth CapEx in 2026 is at least $250 million, indicating a continued investment in the business.

Growth Prospects

Archrock is well-positioned to benefit from the growing demand for natural gas and compression services. The company's focus on deploying compression to support natural gas production, its strong customer base, and its strategic position in key basins are expected to drive growth. With a ROE of 19.28% and an ROIC of 6.69%, the company is generating returns that should support its growth prospects.

3. NewsRoom

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Best Growth Stocks to Buy for February 11th

Feb -11

Source: zacks.com

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Why Archrock Inc. (AROC) Dipped More Than Broader Market Today

Feb -10

Source: zacks.com

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Principal Financial Group Inc. Sells 26,970 Shares of Archrock, Inc. $AROC

Feb -08

Source: defenseworld.net

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Thrivent Financial for Lutherans Sells 205,116 Shares of Archrock, Inc. $AROC

Feb -08

Source: defenseworld.net

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Looking for Leaders? 5 Stocks With Relative Price Strength

Feb -05

Source: zacks.com

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Are Oils-Energy Stocks Lagging Archrock (AROC) This Year?

Feb -04

Source: zacks.com

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Archrock Announces Timing for Fourth Quarter 2025 Results

Feb -03

Source: globenewswire.com

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Why Archrock Might Outpace SLB In 2026

Feb -03

Source: forbes.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.37%)

6. Segments

Contract Operations

Expected Growth: 5%

Contract Operations from Archrock, Inc. achieved 5% growth driven by increasing demand for natural gas processing and treating services, expansion into new markets, and strategic contract wins. Additionally, the segment benefited from operational efficiencies, cost savings initiatives, and a growing presence in the Permian Basin.

Aftermarket Services

Expected Growth: 7%

Archrock's Aftermarket Services segment growth is driven by increasing demand for natural gas compression services, expansion into new markets, and strategic acquisitions. The company's focus on providing cost-effective and efficient solutions, coupled with its strong relationships with customers, has enabled it to capitalize on the growing need for aftermarket services in the oil and gas industry.

7. Detailed Products

Aftermarket Services

Archrock provides aftermarket services, including maintenance, repair, and overhaul of compression equipment, to ensure optimal performance and extend equipment life.

Contract Operations

Archrock offers contract operations services, where they operate and maintain customer-owned compression equipment, providing a comprehensive solution for oil and gas operators.

Equipment Sales

Archrock designs, manufactures, and sells compression equipment, including reciprocating and rotary screw compressors, for oil and gas applications.

Fabrication Services

Archrock provides fabrication services, including assembly, testing, and packaging of compression equipment, to meet specific customer requirements.

Parts and Components

Archrock supplies genuine parts and components for compression equipment, ensuring optimal performance and minimizing downtime.

Rental Equipment

Archrock offers a range of rental compression equipment, including compressors, generators, and auxiliary equipment, for short-term or long-term rentals.

Well Testing

Archrock provides well testing services, including equipment and personnel, to help operators evaluate and optimize well performance.

8. Archrock, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Archrock, Inc. is medium due to the availability of alternative products and services in the energy industry.

Bargaining Power Of Customers

The bargaining power of customers for Archrock, Inc. is low due to the company's strong market position and limited customer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Archrock, Inc. is medium due to the presence of multiple suppliers in the market, but the company's large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants for Archrock, Inc. is low due to the high barriers to entry in the energy industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Archrock, Inc. is high due to the competitive nature of the energy industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 64.75%
Debt Cost 9.46%
Equity Weight 35.25%
Equity Cost 11.82%
WACC 10.29%
Leverage 183.73%

11. Quality Control: Archrock, Inc. passed 0 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
USA Compression Partners

A-Score: 6.8/10

Value: 6.0

Growth: 5.2

Quality: 5.9

Yield: 10.0

Momentum: 6.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Archrock

A-Score: 5.6/10

Value: 3.9

Growth: 4.9

Quality: 5.9

Yield: 8.0

Momentum: 5.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
NOV

A-Score: 5.4/10

Value: 7.7

Growth: 5.4

Quality: 5.0

Yield: 4.0

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Liberty Energy

A-Score: 5.0/10

Value: 7.8

Growth: 8.1

Quality: 4.6

Yield: 3.0

Momentum: 4.0

Volatility: 2.3

1-Year Total Return ->

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Stock-Card
Weatherford

A-Score: 4.7/10

Value: 5.9

Growth: 7.2

Quality: 6.1

Yield: 1.0

Momentum: 4.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Cactus

A-Score: 4.4/10

Value: 5.5

Growth: 4.4

Quality: 8.1

Yield: 2.0

Momentum: 1.5

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

32.9$

Current Price

32.9$

Potential

-0.00%

Expected Cash-Flows