Company Overview
Archrock, Inc. operates as a comprehensive energy infrastructure company within the United States, focusing on the full lifecycle management of assets including designing, sourcing, owning, installing, operating, servicing, repairing, and maintaining equipment. The company functions within the Energy sector and specifically targets the Oil & Gas Equipment & Services industry, providing essential support for upstream and midstream operations across the domestic market. This entity employs a workforce of 1,350 individuals and holds a market capitalization of $6.22B while generating total revenue of $1.49B over the trailing twelve-month period. These financial figures indicate that Archrock is a significant player in its niche, possessing a substantial market presence that reflects a mature operational scale capable of delivering multi-hundred-million dollar earnings.
Financial Health
Archrock reported revenue of $1.49B, net income of $318.96M, and EBITDA of $832.59M for the trailing twelve months, highlighting a substantial gap between gross earnings before interest and taxes and final net income. This significant difference between the $832.59M EBITDA and the $318.96M net income reveals a robust cost structure where interest expenses, taxes, and other operational deductions consume approximately 61.8% of the pre-tax earnings. The company generated free cash flow of $13.27M, which suggests a specific financial position regarding liquidity generation after capital expenditures, though the figure represents a smaller proportion of total revenue compared to earnings. The company holds cash assets of $1.55M against total debt obligations of $2.43B, resulting in a debt-to-equity ratio of 162.62 that indicates a highly leveraged balance sheet reliant on creditor financing. Despite the high leverage, the current ratio stands at 1.54, indicating that the company maintains sufficient short-term liquid assets to cover its current liabilities with a 54% buffer. Management effectiveness is further evidenced by a return on equity of 22.9% and a return on assets of 8.8%, demonstrating efficient utilization of shareholder capital and total assets respectively to generate profits.
Valuation Assessment
Valuation metrics for Archrock show a trailing P/E ratio of 19.41 compared to a forward P/E of 15.21, implying that the market expects earnings growth in the future that would justify a lower multiple than the historical average. The price-to-book ratio is listed at 4.16, indicating that the market values the company at more than four times its book value, reflecting a premium assigned to its intangible assets, brand, or growth prospects relative to its tangible net worth. Alternative valuation measures include a price-to-sales ratio of 4.18 and an EV/EBITDA of 10.38, which suggest the market is willing to pay a significant multiple of sales and earnings before interest, taxes, depreciation, and amortization relative to the company's enterprise value. The stock has traded within a 52-week range with a high of $37.26 and a low of $20.12, providing a clear context for recent price movements relative to the historical volatility of the security. With a beta of 0.91, the stock exhibits volatility that tracks slightly below the broader market average, suggesting it may be less sensitive to macroeconomic shifts than the general equity market.
Growth & Income
Archrock demonstrated revenue growth of 15.5% year over year alongside earnings growth of 95.4% year over year, indicating that profitability is expanding at a significantly faster rate than top-line sales. This divergence suggests that the company is improving its operating leverage, either through cost efficiencies or a shift toward higher-margin services within its Contract Operations and Aftermarket Services segments. The company offers a dividend yield of 2.3% with a payout ratio of 43.7%, indicating that the current dividend distribution is sustainable given the high rate of earnings growth and the ability to retain a majority of profits for reinvestment. The combination of accelerating earnings growth and a manageable payout ratio points to an income profile that rewards shareholders while maintaining flexibility for future expansion or debt reduction.