Archrock Inc
AROC
$37.03
-0.30%
Archrock Inc is an energy infrastructure company that provides natural gas compression services and aftermarket support to customers across the United States, operating in the Oil & Gas Equipment & Services industry. As a leading provider based on total compression fleet horsepower, the company distinguishes itself through its large owned fleet and comprehensive service offerings in contract operations and aftermarket services. The current investor narrative centers on the company's strong growth trajectory, driven by rising natural gas demand and infrastructure needs, with recent quarterly results showing 7.66% YoY revenue growth and expanding margins, while the stock has gained over 60% in the past year, reflecting optimism around its market position and operational leverage.…
AROC
Archrock Inc
$37.03
AROC 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Archrock Inc's 12-month outlook, with a consensus price target around $42.50 and implied upside of +14.8% versus the current price.
Average Target
$42.50
0 analysts
Implied Upside
+14.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$40 - $46
Analyst target range
Archrock is covered by 8 analysts, with a consensus recommendation of 'Strong Buy' (mean rating 1.43 on a 1-5 scale). The average target price is $42.50, implying approximately 13.4% upside from the current price of $37.49. The distribution shows no sell ratings, indicating strong bullish sentiment. The target range spans from $40.00 (low) to $46.00 (high), with the high target suggesting 22.7% upside. The low target of $40.00 still implies 6.7% upside, reflecting a generally positive outlook. The high target likely assumes continued growth in natural gas compression demand and margin expansion, while the low target may factor in potential headwinds from commodity price volatility or economic slowdown. Recent ratings from firms like Mizuho, Citigroup, and Wells Fargo have consistently been positive (Outperform/Buy/Overweight), with no downgrades in the past six months, reinforcing the bullish consensus. The relatively tight spread between low and high targets ($6.00) suggests moderate conviction among analysts.
Bulls vs Bears: AROC Investment Factors
Archrock presents a compelling bull case with strong revenue growth (7.66% YoY), high profitability (19.7% net margin), robust free cash flow ($244.5M TTM), and an attractive valuation (PEG 0.18, trailing P/E 14.06x near historical lows). The analyst consensus is Strong Buy with 13.4% upside to the average target. However, the stock trades near its 52-week high, faces moderate debt (D/E 1.62), and is subject to energy sector cyclicality. The single most important tension is whether the company can sustain its growth trajectory and margin expansion in a potentially slowing energy cycle. Currently, the bull case has stronger evidence given the low PEG ratio and strong fundamentals, but near-term upside may be limited until catalysts emerge.
Bullish
- Strong Revenue Growth Trajectory: Revenue grew 7.66% YoY in Q1 2026 to $373.8M, with consistent growth from $270.5M in Q2 2024 to $383.2M in Q2 2025. This demonstrates robust demand for natural gas compression services, driven by rising natural gas infrastructure needs.
- High Profitability and Expanding Margins: Net margin reached 19.7% in Q1 2026, up from 18.3% in Q4 2024, and operating margin improved to 35.4% from 51.2% in the prior year quarter. ROE is 21.6%, indicating efficient capital use.
- Strong Free Cash Flow Generation: Trailing twelve-month free cash flow is $244.5M, yielding approximately 5.4% of market cap. This provides a cushion for dividends (yield 3.12%) and debt reduction.
- Attractive Valuation with Low PEG Ratio: Trailing P/E of 14.06x is near the lower end of its historical range (9.7x-46.8x), and PEG ratio of 0.18 suggests undervaluation relative to growth. Analyst average target of $42.50 implies 13.4% upside.
Bearish
- Trading Near 52-Week High: At $37.49, the stock is at 88.8% of its 52-week range ($21.17-$42.23), suggesting limited near-term upside potential. The recent pullback from $42.23 high indicates resistance.
- Moderate Debt Levels: Debt-to-equity ratio of 1.62 is moderate but elevated, and interest expense of $39.5M in Q1 2026 consumes a significant portion of operating income. High leverage could strain cash flows if earnings decline.
- Sector Cyclicality and Commodity Exposure: As an oil & gas services company, AROC is sensitive to natural gas prices and energy sector cycles. A downturn in natural gas demand or prices could reduce compression service demand.
- Decelerating Short-Term Momentum: While the 1-year return is strong, the 3-month price change is only +3.6%, and the stock underperformed the S&P 500 by 2.7% over the past 3 months. This suggests a loss of relative momentum.
AROC Technical Analysis
Archrock is in a sustained uptrend, with the stock price up 60.56% over the past year, significantly outperforming the S&P 500's 20.92% gain. The current price of $37.49 sits at 88.8% of its 52-week range ($21.17 low to $42.23 high), indicating the stock is trading near the upper end of its range, which suggests strong momentum but also potential overextension. The 1-year price change of +60.56% and the 6-month change of +41.63% confirm a robust long-term bullish trend. Short-term momentum shows mixed signals: the 1-month price change is +3.31%, while the 3-month change is +3.59%, indicating a deceleration from the rapid gains seen in the first half of the year. The stock experienced a pullback from its 52-week high of $42.23 in late June to $37.49, a decline of about 11.2%, but has since stabilized. The 1-month relative strength versus the S&P 500 is +2.71, suggesting the stock is still outperforming the market in the near term, though the 3-month relative strength is -2.70, indicating a recent loss of relative momentum. The 52-week low of $21.17 provides strong support, while the 52-week high of $42.23 is the immediate resistance level. A breakout above $42.23 would signal a continuation of the uptrend and could target new highs, while a breakdown below the recent support near $36 (the June lows) could lead to a test of the 50-day moving average or lower. The stock's beta of 0.836 indicates it is less volatile than the overall market, meaning it tends to move less than the S&P 500, which may appeal to risk-averse investors but also implies less upside in strong market rallies.
Beta
0.84
0.84x market volatility
Max Drawdown
-17.4%
Largest decline past year
52-Week Range
$21-$42
Price range past year
Annual Return
+58.2%
Cumulative gain past year
| Period | AROC Return | S&P 500 |
|---|---|---|
| 1m | +0.2% | -0.6% |
| 3m | +5.2% | +5.4% |
| 6m | +32.8% | +8.3% |
| 1y | +58.2% | +18.3% |
| ytd | +39.1% | +8.8% |
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AROC Fundamental Analysis
Archrock's revenue trajectory is solidly growing, with Q1 2026 revenue of $373.8 million, up 7.66% year-over-year from $347.2 million in Q1 2025. The multi-quarter trend shows consistent growth, with revenue increasing from $270.5 million in Q2 2024 to $383.2 million in Q2 2025, though Q3 2025 saw a slight dip to $382.4 million. The contract operations segment generated $330.9 million in revenue, while aftermarket services contributed $42.9 million, indicating the core compression business is the primary growth driver. The company is highly profitable, with Q1 2026 net income of $73.8 million, up from $70.9 million in Q1 2025, and a net margin of 19.7%. Gross margin was 47.5% in Q1 2026, slightly down from 64.0% in Q1 2025, but this is likely due to mix shifts; operating margin improved to 35.4% from 53.3% in the prior year quarter, reflecting strong cost control. The trailing twelve-month free cash flow is $244.5 million, indicating robust cash generation. The balance sheet shows a debt-to-equity ratio of 1.62, which is moderate for the energy services sector, and a current ratio of 1.54, suggesting adequate liquidity. Return on equity (ROE) is 21.6%, demonstrating efficient use of shareholder capital. Free cash flow yield (FCF/ market cap) is approximately 5.4%, providing a cushion for dividends and debt reduction.
Quarterly Revenue
$373767000.0B
2026-03
Revenue YoY Growth
+7.7%
YoY Comparison
Gross Margin
47.5%
Latest Quarter
Free Cash Flow
$244523000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is AROC Overvalued?
Since net income is positive, the primary valuation metric is the P/E ratio. The trailing P/E is 14.06x, while the forward P/E is 15.62x, indicating the market expects earnings growth to continue. The gap between trailing and forward P/E suggests modest growth expectations, as the forward multiple is slightly higher. Compared to the industry average P/E (not provided, but typically for Oil & Gas Equipment & Services, the average is around 12-15x), Archrock's trailing P/E of 14.06x appears roughly in line with the sector. However, the PEG ratio of 0.18 is extremely low, suggesting the stock is undervalued relative to its growth rate. Historically, the stock's trailing P/E has ranged from about 9.7x (Q4 2025) to 46.8x (Q4 2021), with the current 14.06x near the lower end of its historical range, implying the market is not pricing in overly optimistic expectations. The price-to-book ratio of 3.04 is above the historical low of 1.13 (Q3 2022) but below the high of 3.99 (Q1 2026), indicating a moderate valuation relative to book value.
PE
14.1x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 10x~37x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
8.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Archrock's debt-to-equity ratio of 1.62 indicates moderate leverage, with interest expense of $39.5M in Q1 2026 representing about 30% of operating income. While free cash flow of $244.5M TTM provides coverage, a sustained downturn could pressure debt servicing. Revenue concentration in contract operations (88.5% of total revenue) exposes the company to a single segment's performance. Gross margin declined from 64.0% in Q1 2025 to 47.5% in Q1 2026, which could signal cost pressures or mix shifts that need monitoring.
Market & Competitive Risks: The stock's beta of 0.836 indicates lower market correlation, but as an energy services company, it is sensitive to natural gas prices and infrastructure spending. Valuation compression risk exists if the market re-rates the sector lower; the trailing P/E of 14.06x is near historical lows, but any earnings disappointment could push it lower. The short ratio of 3.26 days suggests moderate short interest, indicating some bearish sentiment. No recent news highlights specific competitive threats, but the industry is fragmented with multiple players.
Worst-Case Scenario: A sharp decline in natural gas prices or a recession reducing energy demand could lead to contract cancellations and margin compression. In such a scenario, the stock could fall to its 52-week low of $21.17, representing a 43.5% decline from the current price of $37.49. This would imply a P/E of around 8x based on current earnings, which is below the historical low of 9.7x, but possible in a severe downturn. The max drawdown over the past year was -17.35%, but a more severe scenario could exceed that.