ARCHROCK INC (AROC) Stock Fundamental Analysis
NYSE:AROC - New York Stock Exchange, Inc. - US03957W1062 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to AROC. AROC was compared to 62 industry peers in the Energy Equipment & Services industry. While AROC has a great profitability rating, there are quite some concerns on its financial health. AROC is showing excellent growth while it is valued at reasonable prices. Keep and eye on this one!
1. Profitability
1.1 Basic Checks
AROC had positive earnings in the past year.
AROC had a positive operating cash flow in the past year.
AROC had positive earnings in 4 of the past 5 years.
In the past 5 years AROC always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 5.03%, AROC is in line with its industry, outperforming 56.45% of the companies in the same industry.
The Return On Equity of AROC (14.79%) is better than 75.81% of its industry peers.
AROC has a Return On Invested Capital (8.06%) which is in line with its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AROC is below the industry average of 8.69%.
The last Return On Invested Capital (8.06%) for AROC is above the 3 year average (6.45%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.03% | ||
| ROE | 14.79% | ||
| ROIC | 8.06% |
ROA(3y)3.33%
ROA(5y)1.7%
ROE(3y)9.89%
ROE(5y)5.05%
ROIC(3y)6.45%
ROIC(5y)5.83%
1.3 Margins
AROC has a better Profit Margin (16.15%) than 91.94% of its industry peers.
AROC's Profit Margin has improved in the last couple of years.
With an excellent Operating Margin value of 33.33%, AROC belongs to the best of the industry, outperforming 96.77% of the companies in the same industry.
In the last couple of years the Operating Margin of AROC has grown nicely.
The Gross Margin of AROC (61.92%) is better than 96.77% of its industry peers.
AROC's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 33.33% | ||
| PM (TTM) | 16.15% | ||
| GM | 61.92% |
OM growth 3Y20.43%
OM growth 5Y8.34%
PM growth 3Y61.88%
PM growth 5Y8.11%
GM growth 3Y3.75%
GM growth 5Y2.75%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), AROC is destroying value.
Compared to 1 year ago, AROC has more shares outstanding
AROC has more shares outstanding than it did 5 years ago.
AROC has a better debt/assets ratio than last year.
2.2 Solvency
AROC has an Altman-Z score of 0.82. This is a bad value and indicates that AROC is not financially healthy and even has some risk of bankruptcy.
AROC has a worse Altman-Z score (0.82) than 77.42% of its industry peers.
A Debt/Equity ratio of 1.70 is on the high side and indicates that AROC has dependencies on debt financing.
The Debt to Equity ratio of AROC (1.70) is worse than 87.10% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.7 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.82 |
ROIC/WACC0.91
WACC8.9%
2.3 Liquidity
AROC has a Current Ratio of 1.47. This is a normal value and indicates that AROC is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.47, AROC is not doing good in the industry: 72.58% of the companies in the same industry are doing better.
AROC has a Quick Ratio of 1.47. This is a bad value and indicates that AROC is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.96, AROC is doing worse than 79.03% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.47 | ||
| Quick Ratio | 0.96 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 44.58% over the past year.
AROC shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.59% yearly.
AROC shows a strong growth in Revenue. In the last year, the Revenue has grown by 20.14%.
The Revenue has been growing slightly by 3.70% on average over the past years.
EPS 1Y (TTM)44.58%
EPS 3Y76.8%
EPS 5Y5.59%
EPS Q2Q%57.69%
Revenue 1Y (TTM)20.14%
Revenue growth 3Y13.99%
Revenue growth 5Y3.7%
Sales Q2Q%29.3%
3.2 Future
Based on estimates for the next years, AROC will show a very strong growth in Earnings Per Share. The EPS will grow by 26.56% on average per year.
The Revenue is expected to grow by 9.90% on average over the next years. This is quite good.
EPS Next Y56.76%
EPS Next 2Y34.12%
EPS Next 3Y26.56%
EPS Next 5YN/A
Revenue Next Year26.33%
Revenue Next 2Y17.61%
Revenue Next 3Y9.9%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 20.65 indicates a rather expensive valuation of AROC.
Compared to the rest of the industry, the Price/Earnings ratio of AROC is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 25.82. AROC is valued slightly cheaper when compared to this.
AROC is valuated correctly with a Price/Forward Earnings ratio of 13.12.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AROC is on the same level as its industry peers.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.76, AROC is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.65 | ||
| Fwd PE | 13.12 |
4.2 Price Multiples
AROC's Enterprise Value to EBITDA ratio is rather expensive when compared to the industry. AROC is more expensive than 90.32% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 10.54 |
4.3 Compensation for Growth
AROC's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of AROC may justify a higher PE ratio.
A more expensive valuation may be justified as AROC's earnings are expected to grow with 26.56% in the coming years.
PEG (NY)0.36
PEG (5Y)3.69
EPS Next 2Y34.12%
EPS Next 3Y26.56%
5. Dividend
5.1 Amount
AROC has a Yearly Dividend Yield of 2.98%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 4.01, AROC pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.36, AROC pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.98% |
5.2 History
The dividend of AROC has a limited annual growth rate of 3.62%.
AROC has been paying a dividend for at least 10 years, so it has a reliable track record.
AROC has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)3.62%
Div Incr Years2
Div Non Decr Years7
5.3 Sustainability
59.40% of the earnings are spent on dividend by AROC. This is a bit on the high side, but may be sustainable.
The dividend of AROC is growing, but earnings are growing more, so the dividend growth is sustainable.
DP59.4%
EPS Next 2Y34.12%
EPS Next 3Y26.56%
24.78
+0.3 (+1.23%)
Chartmill FA Rating
GICS SectorEnergy
GICS IndustryGroupEnergy
GICS IndustryEnergy Equipment & Services
Earnings (Last)
Earnings (Next)
Inst Owners96.88%
Inst Owner Change0.45%
Ins Owners2.64%
Ins Owner Change0.34%
Market Cap4.35B
Analysts84.29
Price Target32.13 (29.66%)
Short Float %3.91%
Short Ratio4.08
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.98% |
Yearly Dividend0.67
Dividend Growth(5Y)3.62%
DP59.4%
Div Incr Years2
Div Non Decr Years7
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)7.72%
Min EPS beat(2)5%
Max EPS beat(2)10.45%
EPS beat(4)2
Avg EPS beat(4)-3.11%
Min EPS beat(4)-19.32%
Max EPS beat(4)10.45%
EPS beat(8)5
Avg EPS beat(8)1.35%
EPS beat(12)7
Avg EPS beat(12)11.92%
EPS beat(16)8
Avg EPS beat(16)9.93%
Revenue beat(2)0
Avg Revenue beat(2)-1.96%
Min Revenue beat(2)-3.21%
Max Revenue beat(2)-0.71%
Revenue beat(4)1
Avg Revenue beat(4)-1.46%
Min Revenue beat(4)-3.21%
Max Revenue beat(4)0.09%
Revenue beat(8)4
Avg Revenue beat(8)-0.71%
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)-2.7%
PT rev (3m)15.6%
EPS NQ rev (1m)-2.44%
EPS NQ rev (3m)18.26%
EPS NY rev (1m)-0.31%
EPS NY rev (3m)14.65%
Revenue NQ rev (1m)1.41%
Revenue NQ rev (3m)4.15%
Revenue NY rev (1m)0.81%
Revenue NY rev (3m)5.72%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.65 | ||
| Fwd PE | 13.12 | ||
| P/S | 3.52 | ||
| P/FCF | N/A | ||
| P/OCF | 10.67 | ||
| P/B | 3.22 | ||
| P/tB | 3.62 | ||
| EV/EBITDA | 10.54 |
EPS(TTM)1.2
EY4.84%
EPS(NY)1.89
Fwd EY7.62%
FCF(TTM)-0.11
FCFYN/A
OCF(TTM)2.32
OCFY9.37%
SpS7.04
BVpS7.69
TBVpS6.85
PEG (NY)0.36
PEG (5Y)3.69
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.03% | ||
| ROE | 14.79% | ||
| ROCE | 10.9% | ||
| ROIC | 8.06% | ||
| ROICexc | 8.07% | ||
| ROICexgc | 8.4% | ||
| OM | 33.33% | ||
| PM (TTM) | 16.15% | ||
| GM | 61.92% | ||
| FCFM | N/A |
ROA(3y)3.33%
ROA(5y)1.7%
ROE(3y)9.89%
ROE(5y)5.05%
ROIC(3y)6.45%
ROIC(5y)5.83%
ROICexc(3y)6.45%
ROICexc(5y)5.83%
ROICexgc(3y)6.61%
ROICexgc(5y)5.97%
ROCE(3y)8.72%
ROCE(5y)7.88%
ROICexcg growth 3Y21.54%
ROICexcg growth 5Y7.48%
ROICexc growth 3Y20.63%
ROICexc growth 5Y7.9%
OM growth 3Y20.43%
OM growth 5Y8.34%
PM growth 3Y61.88%
PM growth 5Y8.11%
GM growth 3Y3.75%
GM growth 5Y2.75%
F-Score7
Asset Turnover0.31
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.7 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 3.68 | ||
| Cap/Depr | 200.63% | ||
| Cap/Sales | 34.57% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 65.19% | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.47 | ||
| Quick Ratio | 0.96 | ||
| Altman-Z | 0.82 |
F-Score7
WACC8.9%
ROIC/WACC0.91
Cap/Depr(3y)167.19%
Cap/Depr(5y)125.78%
Cap/Sales(3y)29.85%
Cap/Sales(5y)23.62%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)44.58%
EPS 3Y76.8%
EPS 5Y5.59%
EPS Q2Q%57.69%
EPS Next Y56.76%
EPS Next 2Y34.12%
EPS Next 3Y26.56%
EPS Next 5YN/A
Revenue 1Y (TTM)20.14%
Revenue growth 3Y13.99%
Revenue growth 5Y3.7%
Sales Q2Q%29.3%
Revenue Next Year26.33%
Revenue Next 2Y17.61%
Revenue Next 3Y9.9%
Revenue Next 5YN/A
EBIT growth 1Y42.48%
EBIT growth 3Y37.29%
EBIT growth 5Y12.34%
EBIT Next Year108.4%
EBIT Next 3Y37.58%
EBIT Next 5YN/A
FCF growth 1Y69.23%
FCF growth 3Y-20.33%
FCF growth 5YN/A
OCF growth 1Y89.78%
OCF growth 3Y21.86%
OCF growth 5Y8.17%