Archrock, Inc. (AROC) stock analysis

P/E below its 5-year median

Archrock's P/E of 14.4 is below its own 5-year median of 27.1.

P/E below the industry

Archrock's P/E of 14.4 is below the Gas Production and Distribution median of 17.3.

EV/EBITDA below its 5-year median

Archrock's EV/EBITDA of 8.0 is below its 5-year median of 9.9.

P/B above the industry

Archrock's price-to-book of 3.01 is above the Gas Production and Distribution median of 2.10.

Trading below fair value

The share price of $26.65 is below our fair value estimate of $35.77.

Margin of safety over 20%

The price is 25.5% below fair value, more than the 20% cushion we look for.

Revenue growing 10%+ a year

Revenue grew 20.8% a year over the last three fiscal years.

EPS growing 10%+ a year

Diluted EPS grew 87.0% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing slower than the industry

Revenue grew 11.5% over the last twelve months; the Gas Production and Distribution median is 13.6%.

Guidance issued

The latest outlook (full-year 2026 Adjusted EBITDA, Nov 3, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin improving

Gross margin was 48.9% over the last twelve months, against 45.9% a year earlier.

Return on equity under 15%

Return on equity was 22.2% over the last twelve months and averaged 11.8% over five years; we look for 15% on both.

Return on invested capital

Needs operating income and invested capital.

Return on equity above the industry

Archrock's return on equity of 22.2% is above the Gas Production and Distribution median of 12.1%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 21.8% over the last twelve months, against a 5-year average of 11.2%.

Net margin above the industry

Archrock's net margin of 21.8% is above the Gas Production and Distribution median of 13.1%.

High debt

Debt is 151% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 181% five years ago to 151%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 30.9% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.39 times current liabilities.

Elevated bankruptcy risk

The Altman Z-score is 0.64; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Archrock paid dividends worth 2.5% of the share price over the last twelve months.

Yield below Treasuries

The 2.5% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Archrock yields 2.5%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 46.4% of net income.

Covered by free cash flow

Dividends take 52.3% of free cash flow.