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Relative valuation derived from Utilities sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 50GRADE C+
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
16.3%
Sector: 9.9%
Dividend Analysis audit
No Dividend
This company does not currently pay a dividend.
Analyst Projections
Analyst Consensus
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Based on our 6-factor quantitative model, Archrock, Inc. (AROC) receives a "Hold" rating with a composite score of 50.9/100, ranked #284 out of 4446 stocks. Key factor scores: Quality 50/100, Value 65/100, Momentum 64/100. This is quantitative analysis only — not investment advice.
Archrock, Inc. (AROC) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does Archrock, Inc. Do?
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. Archrock, Inc. (AROC) is classified as a mid-cap stock in the Utilities sector. The company is led by CEO D. Bradley Childers and employs approximately 1,100 people, headquartered in Houston, Texas. With a market capitalization of $6.0B, AROC is one of the notable companies in the Utilities sector.
Archrock, Inc. (AROC) Stock Rating — Hold (April 2026)
As of April 2026, Archrock, Inc. receives a Hold rating with a composite score of 50.9/100 and 3 out of 5 stars from the Blank Capital Research quantitative model.AROC ranks #284 out of 4,446 stocks in our coverage universe. Within the Utilities sector, Archrock, Inc. ranks #25 of 112 stocks, placing it in the top quartile of its Utilities peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
AROC Stock Price and 52-Week Range
Archrock, Inc. (AROC) currently trades at $35.95. The stock gained $0.08 (0.2%) in the most recent trading session. The 52-week high for AROC is $37.26, which means the stock is currently trading -3.5% from its annual peak. The 52-week low is $20.12, putting the stock 78.7% above its annual trough. Recent trading volume was 1.2M shares, reflecting moderate market activity.
Is AROC Overvalued or Undervalued? — Valuation Analysis
Archrock, Inc. (AROC) carries a value factor score of 65/100 in the Blank Capital model, indicating fair valuation relative to historical norms. The trailing price-to-earnings ratio is 25.32x, compared to the Utilities sector average of 23.47x — a premium of 8%. The price-to-book ratio stands at 4.13x, versus the sector average of 1.98x. The price-to-sales ratio is 4.38x, compared to 0.82x for the average Utilities stock. On an enterprise value basis, AROC trades at 13.76x EV/EBITDA, versus 4.75x for the sector.
Overall, AROC's valuation appears roughly in line with sector benchmarks, suggesting the market is pricing the stock fairly given its current fundamentals and growth trajectory. Neither deep value nor significantly overpriced, the stock occupies a middle ground on valuation.
Archrock, Inc. Profitability — ROE, Margins, and Quality Score
Archrock, Inc. (AROC) earns a quality factor score of 50/100, indicating solid business quality with consistent operational execution. The return on equity (ROE) is 16.3%, compared to the Utilities sector average of 9.9%, which is within a healthy range. Return on assets (ROA) comes in at 5.6% versus the sector average of 3.1%.
On a margin basis, Archrock, Inc. reports gross margins of 52.9%, compared to 53.1% for the sector. The operating margin is 26.6% (sector: 21.5%). Net profit margin stands at 17.1%, versus 12.8% for the average Utilities stock. Revenue growth is running at 41.4% on a trailing basis, compared to 20.1% for the sector. The overall profitability profile is adequate, though there may be room for margin expansion.
AROC Debt, Balance Sheet, and Financial Health
Archrock, Inc. has a debt-to-equity ratio of 192.0%, compared to the Utilities sector average of 164.5%. This elevated leverage warrants close monitoring, as it increases the company's sensitivity to rising interest rates and economic downturns. The current ratio is 1.54x, suggesting adequate working capital coverage. Total debt on the balance sheet is $2.56B. Cash and equivalents stand at $4M.
AROC has a beta of 1.16, meaning it is roughly in line with the broader market in terms of price volatility. The stability factor score for Archrock, Inc. is 67/100, reflecting average volatility within the normal range for its sector.
Archrock, Inc. Revenue and Earnings History — Quarterly Trend
In TTM 2026, Archrock, Inc. reported revenue of $1.40B and earnings per share (EPS) of $1.83. Net income for the quarter was $243M. Gross margin was 52.9%. Operating income came in at $382M.
In FY 2025, Archrock, Inc. reported revenue of $1.49B and earnings per share (EPS) of $1.83. Net income for the quarter was $322M. Gross margin was 48.6%. Revenue grew 28.7% year-over-year compared to FY 2024. Operating income came in at $424M.
In Q3 2025, Archrock, Inc. reported revenue of $382M and earnings per share (EPS) of $0.40. Net income for the quarter was $71M. Gross margin was 66.0%. Revenue grew 30.9% year-over-year compared to Q3 2024. Operating income came in at $151M.
In Q2 2025, Archrock, Inc. reported revenue of $383M and earnings per share (EPS) of $0.36. Net income for the quarter was $63M. Gross margin was 45.4%. Revenue grew 41.6% year-over-year compared to Q2 2024. Operating income came in at $86M.
Over the past 8 quarters, Archrock, Inc. has demonstrated a growth trajectory, with revenue expanding from $271M to $1.40B. Investors analyzing AROC stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
AROC Dividend Yield and Income Analysis
Archrock, Inc. (AROC) does not currently pay a dividend. This is common among smaller companies in the Utilities industry that prefer to reinvest cash flows into business expansion rather than returning capital to shareholders. Income-focused investors looking for Utilities dividend stocks may want to explore other Utilities stocks or use the stock screener to filter by dividend yield.
AROC Momentum and Technical Analysis Profile
Archrock, Inc. (AROC) has a momentum factor score of 64/100, reflecting neutral trend characteristics. The stock is neither significantly outperforming nor underperforming the broader market on a momentum basis. The investment factor score is 23/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 11/100 signals elevated short interest, which can indicate bearish sentiment among institutional investors.
AROC vs Competitors — Utilities Sector Ranking and Peer Comparison
Comparing AROC against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full AROC vs S&P 500 (SPY) comparison to assess how Archrock, Inc. stacks up against the broader market across all factor dimensions.
AROC Next Earnings Date
No upcoming earnings date has been announced for Archrock, Inc. (AROC) at this time. Check the earnings calendar for the latest scheduling updates across all stocks in our coverage universe.
Should You Buy AROC? — Investment Thesis Summary
Archrock, Inc. presents a balanced picture with arguments on both sides. The value score of 65/100 suggests attractive pricing relative to fundamentals. Price momentum is positive at 64/100, suggesting the trend favors buyers. Low volatility (stability score 67/100) reduces downside risk.
In summary, Archrock, Inc. (AROC) earns a Hold rating with a composite score of 50.9/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on AROC stock.
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Institutional Research Dossier
Archrock, Inc. (AROC) Deep Dive Analysis
Published on March 24, 2026
Action RatingHold
Sections
Executive Summary
Archrock, Inc. (AROC) currently holds a 'Hold' rating, a position supported by a balanced assessment of its financial performance and market valuation. While the company exhibits strong revenue growth and profitability metrics compared to its sector, concerns arise from its negative free cash flow and high debt levels, tempering enthusiasm for a more bullish stance. The current valuation appears fair, reflecting both the company's strengths and its inherent risks within the energy infrastructure sector.
The primary takeaway is that Archrock presents a mixed bag of opportunities and challenges. Its robust revenue growth and superior profitability margins relative to its peers are counterbalanced by significant debt and negative free cash flow, necessitating a cautious approach. Investors should closely monitor the company's ability to manage its debt and improve cash flow generation to determine its long-term sustainability and growth potential.
Business Strategy & Overview
Archrock, Inc. operates as a key player in the energy infrastructure sector, focusing on natural gas compression services. The company's core business revolves around designing, sourcing, owning, installing, operating, servicing, repairing, and maintaining a fleet of natural gas compression equipment. These services are crucial for customers in the oil and natural gas industry, enabling them to efficiently extract and transport natural gas. Archrock's business is divided into two segments: Contract Operations and Aftermarket Services. The Contract Operations segment, which likely constitutes the majority of revenue, involves leasing and operating compression equipment for customers. The Aftermarket Services segment provides parts, maintenance, overhaul, and reconfiguration services for customer-owned compression equipment, adding a recurring revenue stream and enhancing customer relationships.
Archrock's strategic positioning is centered on providing reliable and efficient compression solutions to its customers. The demand for natural gas compression is directly tied to the production and transportation of natural gas, making Archrock a vital link in the energy value chain. The company's ability to offer both contract operations and aftermarket services provides a comprehensive solution for its customers, strengthening its competitive position. Furthermore, Archrock's focus on maintaining and servicing its equipment ensures operational efficiency and minimizes downtime for its customers, enhancing its reputation for reliability.
The company's growth strategy likely involves expanding its fleet of compression equipment, securing new contracts with oil and gas producers, and increasing its market share in the aftermarket services segment. Given the cyclical nature of the oil and gas industry, Archrock's ability to manage its capital expenditures and maintain a diversified customer base is crucial for long-term success. Furthermore, the company's focus on technological innovation and efficiency improvements can help it reduce operating costs and enhance its competitiveness.
The industry context in which Archrock operates is characterized by fluctuating commodity prices, evolving environmental regulations, and increasing competition. The demand for natural gas compression is sensitive to changes in natural gas prices and production levels. Furthermore, stricter environmental regulations regarding emissions from compression equipment could require Archrock to invest in new technologies and equipment. The competitive landscape includes both large, established players and smaller, regional providers of compression services. Archrock's ability to differentiate itself through superior service, technological innovation, and cost-effectiveness will be key to its long-term success.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
41.4%
Sector: 20.1%
+106% VS SCTR
Economic Moat Analysis
Archrock's economic moat can be classified as narrow, primarily stemming from a combination of switching costs and potentially some degree of efficient scale within specific geographic regions. The company's established relationships with oil and gas producers, coupled with the operational complexities of integrating and maintaining compression equipment, create a degree of customer stickiness. Switching to a new provider involves potential downtime, logistical challenges, and the risk of disrupting production, which can deter customers from changing providers unless there are significant cost savings or performance improvements.
The switching costs are further amplified by the specialized nature of compression equipment and the need for skilled technicians to operate and maintain it. Archrock's expertise in this area, built over years of experience, provides a competitive advantage. Customers may be hesitant to switch to a less experienced provider, fearing potential operational inefficiencies or equipment failures. This expertise also extends to the aftermarket services segment, where Archrock's knowledge of its own equipment and its ability to provide timely and reliable maintenance services create a valuable offering for its customers.
While Archrock's scale provides some advantages in terms of purchasing power and operational efficiency, the compression services industry is not characterized by extreme economies of scale. The geographic dispersion of oil and gas production sites necessitates a decentralized network of service locations, limiting the potential for centralized operations and cost savings. However, in specific regions where Archrock has a significant presence, it may benefit from efficient scale, allowing it to offer competitive pricing and superior service compared to smaller, regional providers.
The absence of strong network effects or intangible assets further limits Archrock's moat. While the company's reputation for reliability is valuable, it is not a unique asset that cannot be replicated by competitors. Furthermore, the lack of proprietary technology or intellectual property reduces its ability to differentiate itself from its rivals. Therefore, while Archrock possesses a narrow moat based on switching costs and efficient scale, its competitive advantage is not insurmountable and is subject to erosion over time.
The moat's strength is also contingent on Archrock's ability to maintain its service quality and customer relationships. Any deterioration in service levels or an increase in customer complaints could weaken its competitive position and make it more vulnerable to competition. Furthermore, technological advancements in compression equipment could reduce switching costs and make it easier for customers to switch providers. Therefore, Archrock must continuously invest in its service capabilities and adapt to technological changes to maintain its narrow moat.
Financial Health & Profitability
Archrock's financial health presents a mixed picture. The company has demonstrated strong revenue growth, with TTM revenue reaching $1.49 billion, a significant increase from $1.16 billion in FY2024 and $990.34 million in FY2023. This growth indicates a robust demand for its compression services and effective market penetration. The company's profitability metrics are also impressive, with a TTM net income of $322.29 million and an operating margin of 26.6%, both exceeding the sector averages of 12.8% and 21.7%, respectively. The ROE of 16.3% also surpasses the sector average of 10.0%, indicating efficient utilization of equity.
However, a significant concern arises from the company's negative free cash flow, which stands at $-343.70 million for the TTM period. This negative cash flow suggests that the company is spending more cash than it is generating, potentially due to capital expenditures related to expanding its compression fleet or acquisitions. The negative free cash flow trend is evident in the Q3 FY2025 results, which show a similar figure. This is a critical area to monitor, as sustained negative free cash flow could strain the company's financial resources and necessitate additional borrowing or equity financing.
Archrock's balance sheet reveals a high level of debt, with total debt amounting to $2.56 billion and a debt-to-equity ratio of 192.00, exceeding the sector average of 165.00. While the current ratio of 1.54 indicates sufficient liquidity to meet short-term obligations, the high debt level increases the company's financial risk and limits its flexibility to pursue growth opportunities or weather economic downturns. The company's ability to manage its debt and reduce its leverage is crucial for maintaining its financial stability.
Analyzing the quarterly financial history reveals a consistent trend of revenue growth and profitability. However, the absence of free cash flow data for most quarters makes it difficult to assess the company's cash flow generation capabilities over time. The gross margin and operating margin have fluctuated, with Q3 FY2025 showing a particularly high gross margin of 66.1% and an operating margin of 39.5%. These fluctuations could be due to changes in pricing, cost of goods sold, or operating expenses. Overall, Archrock's financial health is characterized by strong revenue growth and profitability, but is tempered by negative free cash flow and high debt levels, requiring careful monitoring and proactive management.
Valuation Assessment
Archrock's valuation presents a mixed picture, suggesting a fair valuation relative to its peers and historical performance. The company's P/E ratio of 19.4x is slightly below the sector average of 22.7x, indicating that the market is not excessively valuing its earnings. Similarly, the EV/EBITDA ratio of 3.7x is significantly lower than the sector average of 4.8x, suggesting that the company is undervalued based on its enterprise value and earnings before interest, taxes, depreciation, and amortization. These metrics indicate that Archrock is not trading at a premium compared to its peers in the utilities sector.
However, the negative free cash flow complicates the valuation assessment. Traditional valuation methods, such as discounted cash flow analysis, rely on positive free cash flow to estimate the intrinsic value of a company. The negative free cash flow makes it difficult to apply these methods and raises concerns about the sustainability of the company's current valuation. Investors may be hesitant to pay a premium for a company that is not generating positive cash flow, as it could indicate underlying financial problems or unsustainable business practices.
Considering the company's strong revenue growth and profitability, the current valuation appears reasonable. The market may be factoring in the company's growth potential and its ability to generate positive free cash flow in the future. However, the high debt level and the negative free cash flow create uncertainty and limit the potential for significant upside in the stock price. Investors may be waiting for the company to demonstrate its ability to manage its debt and improve its cash flow generation before assigning a higher valuation.
Compared to its historical valuation, Archrock's current multiples are within a reasonable range. The company's P/E ratio has fluctuated over time, reflecting changes in its earnings and market sentiment. The current P/E ratio is not significantly higher or lower than its historical average, suggesting that the stock is not excessively overvalued or undervalued. However, the lack of historical free cash flow data makes it difficult to assess the company's valuation based on this metric. Overall, Archrock's valuation appears fair, reflecting both its strengths and its weaknesses. The company's strong revenue growth and profitability are counterbalanced by its negative free cash flow and high debt levels, resulting in a valuation that is neither excessively cheap nor excessively expensive.
Risk & Uncertainty
Archrock faces several specific, idiosyncratic risks that could negatively impact its business and financial performance. One of the most significant risks is its exposure to the cyclical nature of the oil and gas industry. Fluctuations in commodity prices and production levels can directly affect the demand for Archrock's compression services. A decline in oil and gas prices could lead to reduced drilling activity and lower production volumes, resulting in decreased demand for compression equipment and services. This could negatively impact Archrock's revenue and profitability.
Another key risk is the company's high level of debt. The company's debt-to-equity ratio of 192.00 is significantly higher than the sector average, increasing its financial risk. High debt levels can limit the company's flexibility to pursue growth opportunities, make acquisitions, or weather economic downturns. Furthermore, rising interest rates could increase the company's borrowing costs and further strain its financial resources. Archrock's ability to manage its debt and reduce its leverage is crucial for mitigating this risk.
Regulatory risks also pose a threat to Archrock's business. Stricter environmental regulations regarding emissions from compression equipment could require the company to invest in new technologies and equipment, increasing its capital expenditures and operating costs. Furthermore, changes in regulations related to hydraulic fracturing or pipeline infrastructure could affect the demand for natural gas and, consequently, the demand for Archrock's compression services. The company must stay abreast of regulatory changes and adapt its operations to comply with new requirements.
Competition within the compression services industry is another risk factor. The industry includes both large, established players and smaller, regional providers, creating a competitive landscape. Archrock faces competition from these players in terms of pricing, service quality, and technological innovation. The company must differentiate itself through superior service, technological innovation, and cost-effectiveness to maintain its market share and profitability. Failure to do so could result in lost contracts and reduced revenue.
Bulls Say / Bears Say
The Bull Case
BULL VIEWArchrock's strong revenue growth and superior profitability margins compared to its peers in the utilities sector position it for continued success as natural gas demand remains robust.
BULL VIEWThe company's strategic focus on both contract operations and aftermarket services provides a diversified revenue stream and strengthens its relationships with key customers, ensuring long-term stability.
BULL VIEWArchrock's current valuation, with a P/E ratio below the sector average, presents an attractive entry point for investors seeking exposure to the energy infrastructure sector with significant growth potential.
The Bear Case
BEAR VIEWArchrock's negative free cash flow and high debt levels raise concerns about its long-term financial sustainability and ability to fund future growth initiatives without additional borrowing or equity dilution.
BEAR VIEWThe company's exposure to the cyclical nature of the oil and gas industry makes it vulnerable to fluctuations in commodity prices and production levels, potentially leading to decreased demand for its compression services.
BEAR VIEWDespite its strong revenue growth, Archrock's competitive landscape and regulatory risks could erode its profitability and limit its ability to maintain its market share in the long run.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score AROC and 4,400+ other equities.
Archrock, Inc. exhibits a 184% valuation premium relative to institutional benchmarks. This represents a potential valuation overextension based on current multiples.
Return on Assets
Efficiency of asset utilization
5.6%
Sector: 3.1%
Gross Margin
Pricing power and cost efficiency
52.9%
Sector: 53.1%
Operating Margin
Core business profitability
26.6%
Sector: 21.5%
Net Margin
Bottom-line profitability
17.1%
Sector: 12.8%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
