AROC Stock Risk & Deep Value Analysis
Archrock Inc
Energy • Oil & Gas Equipment & Services
DVR Score
out of 10
What You Need to Know About AROC Stock
We analyzed Archrock Inc using our deep value framework. Sign in to see our full verdict and DVR Score.
We ran AROC through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Moderate. Here's what we found.
AROC Risk Analysis & Red Flags
What Could Go Wrong
The biggest risk for Archrock is a sustained decline in natural gas production and demand, driven by an accelerating energy transition or prolonged low commodity prices. Q1 2026 revenue growth decelerated to 7.7% YoY and missed estimates, indicating potential market softening. A significant drop in utilization rates below the current 95% or a sustained reduction in contract operations adjusted gross margin from 72% could severely impact the company's free cash flow and ability to service its $2.4B long-term debt.
Risk Matrix
Overall
Moderate
Financial
Medium
Market
Medium
Competitive
Medium
Execution
Medium
Regulatory
Medium
Red Flags
- ⚠
Q1 2026 revenue miss of $13.3M and EPS miss of $0.06 compared to consensus, indicating potential operational headwinds or slowing market demand.
- ⚠
Significant insider selling by CFO Doug S. Aron (169,550 shares, estimated $5.95M over 6 months) and other executives, potentially signaling limited future upside conviction.
- ⚠
The company operates in a mature, capital-intensive natural gas compression sector, which inherently limits its potential for disruptive innovation or exponential (10x) growth within a 3-5 year timeframe.
- ⚠
Recent analyst downgrades by Zacks Research and Wall Street Zen (March/April 2026) to 'Hold' status, indicating a more cautious outlook.
Upcoming Risk Events
- 📅
Q2 2026 Earnings Miss (Expected August 3, 2026): Another miss on revenue or EPS estimates, especially coupled with weaker guidance, could trigger a 5-10% stock price decline and further analyst downgrades.
- 📅
Insider Selling Persistence (Ongoing): Continued significant insider selling, particularly by the CFO or CEO, beyond the current reported $5.95M by the CFO, could signal a lack of confidence and dampen investor sentiment, potentially capping upside potential.
When to Reconsider
- 🚪
Exit if quarterly contract operations revenue consistently drops below $300M (from Q1 2026's $330.9M), signaling a structural decline in demand.
- 🚪
Sell if the leverage ratio (currently 2.6x) rises above 3.5x for two consecutive quarters, indicating increasing financial strain.
- 🚪
Exit if the annualized dividend yield falls below 2.0% without substantial capital appreciation, reducing its appeal as an income stock.
Unlock AROC Risk Analysis & Red Flags
Create a free account to see the full analysis
What Does Archrock Inc (AROC) Do?
Market Cap
$6.47B
Sector
Energy
Industry
Oil & Gas Equipment & Services
Employees
1,300
Archrock, Inc., together with its subsidiaries, operates as an energy infrastructure company in the United States. The company operates in two segments, Contract Operations and Aftermarket Services. It engages in the designing, sourcing, owning, installing, operating, servicing, repairing, and maintaining of its owned fleet of natural gas compression equipment to provide natural gas compression services. The company also sells over-the-counter parts and components, as well as provides operations, major and routine maintenance, overhaul, and reconfiguration services to customers who own compression equipment; and operates as a packager of reciprocal and rotary screw natural gas compressors for sale or on a contract compression basis. It serves integrated and independent oil and natural gas processors, gatherers, and transporters. 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.
Visit Archrock Inc WebsiteInvestment Thesis
If Archrock can consistently maintain ~95% spot horsepower utilization and 70%+ contract operations adjusted gross margins in a stable natural gas environment, then its predictable cash flows, manageable leverage (2.6x), and consistent dividend yield (currently ~2.4%) position it as a steady income and value play within the energy infrastructure sector, appealing to investors seeking stability rather than explosive growth, as the market is likely underestimating its long-term cash generation capabilities for income.
Is AROC Stock Undervalued?
Unlock the full AI analysis for AROC
Get the complete DVR score, risk analysis, and more
Unlock the full report
Create a free account to see the DVR score, risk flags, and AI analysis.
AROC Price Targets & Strategy
12-Month Target
$39.50
Bull Case
$42.00
Bear Case
$35.00
Valuation Basis
Based on a ~23.8x forward P/E multiple applied to an estimated FY2026 EPS of $1.65, aligned with analyst consensus and historical valuation for this stable income-generating asset.
Entry Strategy
Dollar-cost average between $35.00-$36.50 on any dips, targeting a ~2.4%-2.5% dividend yield, as the stock is more suited for income than growth.
Exit Strategy
Take 50% profit at $42.00 (highest analyst target), consider full exit if the dividend yield falls below 2.0% due to price appreciation without corresponding dividend increases, or if the leverage ratio consistently exceeds 3.0x. Stop loss at $33.00.
Portfolio Allocation
2-4% for moderate risk tolerance, primarily as an income-generating component within an energy infrastructure allocation.
Price Targets & Strategy
Sign up free to unlock price targets and entry/exit strategies
Is AROC Financially Healthy?
Valuation
P/E Ratio
19.88
Forward P/E
20.60
EV/EBITDA
13.40
PEG Ratio
1.66
Price/Book
4.47
Price/Sales
5.07
Profitability
Gross Margin
66.32%
Operating Margin
36.04%
Net Margin
21.45%
Return on Equity
22.28%
Revenue Growth
22.66%
EPS
$1.86
Balance Sheet
Current Ratio
1.54
Quick Ratio
0.99
Debt/Equity
1.62
Total Debt
$2.38B
Cash Flow
Operating Cash Flow
$185.90M
Free Cash Flow
$91.90M
EBITDA
$221.00M
Other
Beta (Volatility)
0.94
Dividend Yield
2.36%
Does AROC Have a Competitive Moat?
Sign in to unlockMoat Rating
🛡️ Narrow
Moat Trend
Stable
Moat Sources
2 Identified
Archrock's moat is durable as long as natural gas remains a critical component of the energy mix. Its established infrastructure, efficient operations, and the high cost of switching for customers provide a competitive barrier. However, the long-term energy transition towards renewables presents an existential, albeit distant, threat.
Moat Erosion Risks
- •Accelerated energy transition and decarbonization efforts reducing long-term natural gas demand and associated compression needs.
- •Technological advancements in compression that could lower barriers to entry or render existing infrastructure less competitive.
- •Significant downturns in natural gas prices impacting E&P activity and, consequently, demand for compression services.
AROC Competitive Moat Analysis
Sign up to see competitive advantages
AROC Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral, with discussions likely focused on dividend stability and natural gas market trends rather than speculative growth.
Institutional Sentiment
Neutral, evidenced by a 'Moderate Buy' consensus rating from 9 Buy and 2 Hold ratings, but recent downgrades from Zacks Research and Wall Street Zen suggest increasing caution.
Insider Activity (Form 4)
CFO Doug S. Aron sold 98,050 shares on March 30, 2026, and a broader 6-month total of 169,550 shares ($5.95M). SVP Eric W. Thode sold 40,740 shares ($1.02M). VP Donna A. Henderson sold 10,413 shares ($382,573). This indicates net selling by key executives.
Options Flow
Normal options activity, with no specific unusual flow data provided to indicate significant institutional positioning beyond typical hedging or income strategies.
Earnings Intelligence
Next Earnings
2026-08-03
Surprise Probability
Medium
Historical Earnings Pattern
Q1 2026 results missed both revenue and EPS consensus after a strong Q4 2025 beat. This suggests the market is sensitive to operational execution relative to expectations, and deviations can lead to price volatility post-earnings.
Key Metrics to Watch
Competitive Position
Top Competitor
USAC (USA Compression Partners, LP)
Market Share Trend
Stable, with high utilization rates (95%) indicating consistent demand for its services within its operating regions.
Valuation vs Peers
Likely trades at a comparable valuation to its peers (e.g., similar P/E, EV/EBITDA ratios) given the similar business models and exposure to natural gas market dynamics. Its dividend yield is competitive for the sector.
Competitive Advantages
- •Efficient Scale: Large operational footprint and asset base provides economies of scale in maintenance and deployment.
- •Switching Costs: High costs and logistical challenges for customers to switch compression service providers, leading to stable contracts.
- •Operational Expertise: Long-standing experience and established relationships in the natural gas midstream sector.
Market Intelligence
Sign up free to unlock sentiment, earnings intel, and peer analysis
What Could Drive AROC Stock Higher?
Near-Term (0-6 months)
- •Q2 2026 Earnings Release (Expected August 3, 2026): A significant beat on consensus EPS ($0.48) and revenue ($379.9M) could alleviate concerns from the Q1 miss and confirm operational efficiency, potentially re-rating the stock by 5-8%.
- •Dividend Declaration (Estimated Late July 2026): A dividend increase above the current $0.22/share would reinforce its income appeal and signal confidence in future cash flow, potentially attracting more income-focused investors.
Medium-Term (6-18 months)
- •Sustained High Utilization (Next 6-18 months): If spot horsepower utilization consistently remains above 95% through 2027 due to robust natural gas demand, it could drive modest revenue growth and higher FCF, contributing an additional $10-15M in quarterly adjusted gross margin.
- •Major Contract Renewal/Expansion (Next 6-18 months): Securing multi-year contract renewals or expansion with large E&P or midstream operators (e.g., a top-tier customer expanding capacity by >10,000 HP) would de-risk future revenue streams and demonstrate competitive strength, adding ~$5-10M in annualized revenue.
Long-Term (18+ months)
- •Energy Infrastructure Consolidation (18+ months): If larger midstream players consolidate the natural gas compression sector, Archrock's established footprint, operational scale, and consistent FCF could make it an attractive acquisition target, potentially yielding a 20-30% premium over current market prices.
- •Advancement in Low-Carbon Compression Technologies (18+ months): Successful integration and deployment of next-generation, lower-emission compression units could position AROC for continued relevance in an evolving energy landscape, potentially opening new markets or extending existing contract lifespans by up to 5-10 years, ensuring long-term stable cash flows.
Catalysts & Growth Drivers
Sign up free to see growth catalysts
What's the Bull Case for AROC?
- ✓
Watch quarterly contract operations adjusted gross margin — a sustained drop below 70% would signal operational erosion.
- ✓
Monitor the leverage ratio (currently 2.6x) — an increase above 3.0x would indicate rising financial risk.
- ✓
Track insider selling activity — any further large-scale sales by the CEO/CFO would be a significant negative sentiment indicator.
Bull Case Analysis
Sign up free to see the bull case
Competing with AROC
See how Archrock Inc compares to related companies
| Company | Market Cap | DVR Score | P/E | Revenue | Profit Margin | Rev Growth | |
|---|---|---|---|---|---|---|---|
Archrock Inc AROC | $6.5B | 2.5 | 19.9 | $373.8M | 21.4% | 22.7% | |
Chevron Corp CVX | $377.5B | 0.1 | 34.3 | $47.3B | 5.9% | -3.6% | Compare → |
EOG Resources Inc EOG | — | 1.2 | — | — | — | — | Compare → |
SLB NV SLB | $86.1B | 0.9 | 25.9 | $35.7B | 9.3% | -0.4% | Compare → |
Exxon Mobil Corp XOM | $632.2B | 2.0 | 25.0 | $349.6B | 7.8% | -4.1% | Compare → |
📊 Explore More Stock Analysis
Get comprehensive Deep Value Reports for thousands of stocks. Research risk, financial health, and investment potential with our AI-powered analysis.
How Archrock Inc Makes Money
Archrock Inc. is a leading provider of natural gas compression services and equipment in the United States. The company's primary business involves leasing and operating natural gas compression equipment to customers across the upstream and midstream sectors of the oil and natural gas industry. This equipment is crucial for moving natural gas efficiently from wellheads to processing plants and pipelines. Archrock also sells new and used compression equipment and offers aftermarket services, leveraging its extensive operational footprint and technical expertise to maintain high equipment utilization and service quality.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Archrock Inc (AROC)?
As of May 22, 2026, Archrock Inc has a DVR Score of 2.5 out of 10, placing it in the "Risk Trap" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Archrock Inc?
Archrock Inc's market capitalization is approximately $6.5B. The company operates in the Energy sector within the Oil & Gas Equipment & Services industry.
What ticker symbol does Archrock Inc use?
AROC is the ticker symbol for Archrock Inc. The company trades on the NYQ.
What is the risk level for AROC stock?
Our analysis rates Archrock Inc's overall risk as Moderate. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of AROC?
Archrock Inc currently has a price-to-earnings (P/E) ratio of 19.9. This is in line with broader market averages.
Does Archrock Inc pay a dividend?
Yes, Archrock Inc pays a dividend with a current yield of approximately 2.36%.
Is Archrock Inc's revenue growing?
Archrock Inc has reported revenue growth of 22.7%. The company is showing strong top-line momentum.
Is AROC stock profitable?
Archrock Inc has a profit margin of 21.4%. This indicates strong profitability.
How often is the AROC DVR analysis updated?
Our AI-powered analysis of Archrock Inc is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on May 22, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for AROC (Archrock Inc) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.