USA Compression Partners, LP (USAC) | Investment Case

1. Company Snapshot

1.a. Company Description

USA 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.

Show Full description

1.b. Last Insights on USAC

USA Compression Partners' recent performance was driven by strong Q3 earnings, beating estimates and recording $250.3 million in revenue, up from $240.0 million in Q3 2024. The company's net income reached $34.5 million, surpassing $19.3 million in Q3 2024. A $0.525 per common unit distribution was declared for Q3 2025. D.A. Davidson & CO. increased its stake in USAC by 15.6%. The company also upgraded its 2025 outlook, expecting adjusted EBITDA of $610-$620 million. (Source: USA Compression Partners Reports Third-Quarter 2025 Results)

1.c. Company Highlights

Last Price	24.27
Change Percentage	-0.86%
Open	24.46
Previous Close	24.48
Market Cap ( Millions)	2978
Volume	263218
Year High	30.1
Year Low	21.53
M A 50	23.49
M A 200	24.52

FCF Yield	9.75%
Dividend Yield	8.65%
ROE	-400.10%
Debt / Equity	-3307.80%
Net Debt / EBIDTA	419.46%
Price To Book	-38.76
Price Earnings Ratio	27.32
Price To FCF	10.25
Price To sales	3.0
EV / EBITDA	9.11

2. USA Compression Partners Posts Solid Q3 2025 Earnings

USA Compression Partners reported a strong third quarter in 2025, with revenues exceeding $250 million, adjusted EBITDA of over $160 million, and distributable cash flow (DCF) approaching $104 million. The company's adjusted gross margins were higher at 69.3%, driven by the realization of both one-time and ongoing cost savings. Earnings per share (EPS) came in at $0.26, beating analyst estimates of $0.22. The company's financial performance was characterized by strong margins and consistent utilization, resulting in an improved leverage ratio of 3.9x and DCF coverage ratio of 1.6x.

Publication Date: Nov -09

                                    📋 Highlights
                                    Revenue and Profit Growth:
                                                Revenues exceeded $250 million, adjusted EBITDA surpassed $160 million, and DCF approached $104 million in Q3 2025.
Guidance Updates:
                                                2025 adjusted EBITDA range raised to $610–620 million (up $15 million midpoint), DCF range to $370–380 million.
Operational Expansion:
                                                Active horsepower in Northeast and Central regions to grow by >40,000 hp by year-end, driven by 300 small-unit activations.
Cost Management:
                                                SG&A savings of $5 million achieved in 2025, with gross margins hitting 69.3% due to procurement and tax refund benefits.
Financial Flexibility:
                                                Debt-to-EBITDA leverage ratio at 3.9x, DCF coverage at 1.6x, and ABL/2027 note refinancing reduced borrowing costs significantly.

                                

Operational Highlights

The company continued to see growth opportunities in the markets it operates, with active horsepower in the Northeast and Central regions expected to grow by more than 40,000 horsepower before the end of 2025. USA Compression Partners' sales team also achieved pricing improvements, with average revenue per horsepower reaching an all-time high of $21.46 in the third quarter. As Clint Green, President and CEO, noted, the company's geographic diversification is strong, allowing it to move horsepower to support growth opportunities.

Guidance and Outlook

USA Compression Partners has increased its 2025 guidance ranges for EBITDA and DCF, driven by effective cost management and operational discipline. The company expects new horsepower to exceed 2025 levels, given continued natural gas demand and new projects. Analysts estimate revenue growth of 4.5% next year, indicating a positive outlook for the company.

Valuation and Metrics

With a P/E Ratio of 30.12 and EV/EBITDA of 9.57, the company's valuation appears reasonable considering its growth prospects. The Dividend Yield of 8.84% is also attractive, indicating a relatively stable return for investors. However, the Net Debt / EBITDA ratio of 4.43 suggests that the company's leverage remains a concern. Overall, USA Compression Partners' solid financial performance and growth prospects make it an attractive investment opportunity in the energy sector.

3. NewsRoom

USA Compression Announces Acquisition of J-W Power for $860 Million

Dec -02

Source: zacks.com

USA Compression Partners, LP Common Units (USAC) M&A Call Transcript

Dec -01

Source: seekingalpha.com

USA Compression Seals $860 Million Deal, Adds 4.4 Million Horsepower Fleet

Dec -01

Source: feeds.benzinga.com

USA Compression Scales Up With Accretive Private Player Acquisition

Dec -01

Source: seekingalpha.com

USA Compression Partners LP Announces Strategic Acquisition of J-W Power Company

Dec -01

Source: businesswire.com

Black Friday Sale for Income Investors: These Ultra-High-Yield Dividend Stocks Are Bargain Buys

Nov -28

Source: fool.com

Low-Beta Winners: Why USAC, COCO, NGS & AEM are Must-Buy Stocks Now

Nov -26

Source: zacks.com

Here's What Key Metrics Tell Us About USA Compression (USAC) Q3 Earnings

Nov -24

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.53%)

6. Segments

Contract Operations

Expected Growth: 4.5%

USA Compression Partners, LP's 4.5% growth in Contract Operations is driven by increasing demand for natural gas infrastructure, expansion of existing contracts, and new business wins. Additionally, the company's focus on operational efficiency, cost savings, and strategic acquisitions contribute to its growth momentum.

Parts and Service

Expected Growth: 4.8%

USA Compression Partners, LP's 4.8% growth in Parts and Service is driven by increasing demand for natural gas infrastructure, rising production volumes, and a growing fleet of compression units. Additionally, the company's focus on aftermarket services, including maintenance and repair, contributes to the segment's growth.

Related Party

Expected Growth: 5.2%

USA Compression Partners, LP's 5.2% growth is driven by increasing demand for natural gas infrastructure, strategic acquisitions, and expansion of services to existing customers. Additionally, the partnership's focus on operational efficiency and cost savings initiatives have contributed to its growth. Furthermore, the growing need for compression services in the Permian Basin and other key shale plays has also supported the company's growth.

7. Detailed Products

Natural Gas Compression Services

USA Compression Partners, LP provides natural gas compression services to customers in the oil and gas industry, enabling them to transport natural gas through pipelines.

Infrastructure Services

The company offers infrastructure services, including the installation, operation, and maintenance of compression facilities, pipelines, and other related infrastructure.

Equipment Sales

USA Compression Partners, LP sells compression equipment, including compressors, engines, and other related equipment, to customers in the oil and gas industry.

Parts and Service

The company provides parts and service support for compression equipment, including maintenance, repair, and overhaul services.

Engineering and Design Services

USA Compression Partners, LP offers engineering and design services for compression facilities and infrastructure, including design, engineering, and project management.

8. USA Compression Partners, LP's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for USA Compression Partners, LP is moderate due to the availability of alternative services and products in the energy industry.

Bargaining Power Of Customers

The bargaining power of customers for USA Compression Partners, LP is low due to the company's strong market position and limited customer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for USA Compression Partners, LP is moderate due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for USA Compression Partners, LP 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 USA Compression Partners, LP is high due to the competitive nature of the energy industry, with multiple players competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	92.79%
Debt Cost	7.37%
Equity Weight	7.21%
Equity Cost	9.98%
WACC	7.56%
Leverage	1286.73%

11. Quality Control: USA Compression Partners, LP passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

USA Compression Partners

A-Score: 7.1/10

Value: 6.0

Growth: 5.2

Quality: 6.7

Yield: 10.0

Momentum: 6.5

Volatility: 8.0

1-Year Total Return ->

Archrock

A-Score: 5.9/10

Value: 4.2

Growth: 4.6

Quality: 5.2

Yield: 8.0

Momentum: 7.5

Volatility: 6.0

1-Year Total Return ->

NOV

A-Score: 5.0/10

Value: 7.6

Growth: 5.6

Quality: 5.1

Yield: 4.0

Momentum: 3.0

Volatility: 5.0

1-Year Total Return ->

Weatherford

A-Score: 4.4/10

Value: 6.1

Growth: 7.4

Quality: 5.9

Yield: 1.0

Momentum: 2.5

Volatility: 3.7

1-Year Total Return ->

Cactus

A-Score: 4.4/10

Value: 5.4

Growth: 4.4

Quality: 8.1

Yield: 2.0

Momentum: 1.5

Volatility: 5.0

1-Year Total Return ->

Liberty Energy

A-Score: 4.3/10

Value: 7.5

Growth: 7.9

Quality: 4.6

Yield: 3.0

Momentum: 0.5

Volatility: 2.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

2.91%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.56%

USA Compression Partners, LP - US90290N1090

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on USAC

1.c. Company Highlights

Expensive

Higher Yield

Medium Volatility

Earnings Beats

Less Volatile

Earnings Miss

Revenues Miss

Fairly Valued

Stable Momentum

Revenues Beats

Average Quality

2. USA Compression Partners Posts Solid Q3 2025 Earnings

Operational Highlights

Guidance and Outlook

Valuation and Metrics

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.53%)

6. Segments

Contract Operations

Expected Growth: 4.5%

Parts and Service

Expected Growth: 4.8%

Related Party

Expected Growth: 5.2%

7. Detailed Products

Natural Gas Compression Services

Infrastructure Services

Equipment Sales

Parts and Service

Engineering and Design Services

8. USA Compression Partners, LP's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: USA Compression Partners, LP passed 2 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

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

24.27$

Current Price

24.27$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA