ARCHROCK INC (AROC) Stock Fundamental Analysis
NYSE:AROC - New York Stock Exchange, Inc. - US03957W1062 - Common Stock - Currency: USD
Overall AROC gets a fundamental rating of 5 out of 10. We evaluated AROC against 62 industry peers in the Energy Equipment & Services industry. AROC scores excellent on profitability, but there are concerns on its financial health. AROC is not overvalued while it is showing excellent growth. This is an interesting combination.
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.
Of the past 5 years AROC 4 years were profitable.
In the past 5 years AROC always reported a positive cash flow from operatings.
1.2 Ratios
AROC's Return On Assets of 4.44% is in line compared to the rest of the industry. AROC outperforms 53.23% of its industry peers.
AROC's Return On Equity of 12.84% is fine compared to the rest of the industry. AROC outperforms 69.35% of its industry peers.
AROC has a Return On Invested Capital of 7.43%. This is comparable to the rest of the industry: AROC outperforms 58.06% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AROC is in line with the industry average of 8.26%.
The last Return On Invested Capital (7.43%) for AROC is above the 3 year average (6.45%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.44% | ||
| ROE | 12.84% | ||
| ROIC | 7.43% |
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
The Profit Margin of AROC (14.68%) is better than 85.48% of its industry peers.
In the last couple of years the Profit Margin of AROC has grown nicely.
Looking at the Operating Margin, with a value of 31.55%, AROC belongs to the top of the industry, outperforming 95.16% of the companies in the same industry.
AROC's Operating Margin has improved in the last couple of years.
The Gross Margin of AROC (60.39%) is better than 95.16% of its industry peers.
In the last couple of years the Gross Margin of AROC has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 31.55% | ||
| PM (TTM) | 14.68% | ||
| GM | 60.39% |
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.
AROC has more shares outstanding than it did 1 year ago.
The number of shares outstanding for AROC has been increased compared to 5 years ago.
Compared to 1 year ago, AROC has an improved debt to assets ratio.
2.2 Solvency
AROC has an Altman-Z score of 0.74. This is a bad value and indicates that AROC is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of AROC (0.74) is worse than 69.35% of its industry peers.
The Debt to FCF ratio of AROC is 31.16, which is on the high side as it means it would take AROC, 31.16 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of AROC (31.16) is worse than 62.90% of its industry peers.
A Debt/Equity ratio of 1.66 is on the high side and indicates that AROC has dependencies on debt financing.
AROC has a worse Debt to Equity ratio (1.66) than 87.10% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.66 | ||
| Debt/FCF | 31.16 | ||
| Altman-Z | 0.74 |
ROIC/WACC0.86
WACC8.61%
2.3 Liquidity
AROC has a Current Ratio of 1.24. This is a normal value and indicates that AROC is financially healthy and should not expect problems in meeting its short term obligations.
AROC has a worse Current ratio (1.24) than 82.26% of its industry peers.
A Quick Ratio of 0.76 indicates that AROC may have some problems paying its short term obligations.
AROC's Quick ratio of 0.76 is on the low side compared to the rest of the industry. AROC is outperformed by 95.16% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.24 | ||
| Quick Ratio | 0.76 |
3. Growth
3.1 Past
AROC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 56.72%, which is quite impressive.
The Earnings Per Share has been growing slightly by 5.59% on average over the past years.
The Revenue has grown by 16.89% in the past year. This is quite good.
AROC shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.70% yearly.
EPS 1Y (TTM)56.72%
EPS 3Y76.8%
EPS 5Y5.59%
EPS Q2Q%61.9%
Revenue 1Y (TTM)16.89%
Revenue growth 3Y13.99%
Revenue growth 5Y3.7%
Sales Q2Q%25.74%
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.
AROC is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.97% yearly.
EPS Next Y57.24%
EPS Next 2Y34.48%
EPS Next 3Y26.56%
EPS Next 5YN/A
Revenue Next Year25.32%
Revenue Next 2Y16.52%
Revenue Next 3Y9.97%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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
Based on the Price/Earnings ratio of 23.39, the valuation of AROC can be described as rather expensive.
67.74% of the companies in the same industry are cheaper than AROC, based on the Price/Earnings ratio.
AROC's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 28.22.
AROC is valuated correctly with a Price/Forward Earnings ratio of 14.88.
AROC's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. AROC is more expensive than 64.52% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 20.86. AROC is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.39 | ||
| Fwd PE | 14.88 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, AROC is valued more expensive than 88.71% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of AROC indicates a slightly more expensive valuation: AROC is more expensive than 66.13% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 61.09 | ||
| EV/EBITDA | 11.34 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent 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)0.41
PEG (5Y)4.18
EPS Next 2Y34.48%
EPS Next 3Y26.56%
5. Dividend
5.1 Amount
AROC has a Yearly Dividend Yield of 3.15%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.32, AROC pays a better dividend. On top of this AROC pays more dividend than 80.65% of the companies listed in the same industry.
AROC's Dividend Yield is a higher than the S&P500 average which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.15% |
5.2 History
The dividend of AROC has a limited annual growth rate of 3.62%.
AROC has paid a dividend for at least 10 years, which is a reliable track record.
As AROC did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)3.62%
Div Incr Years2
Div Non Decr Years7
5.3 Sustainability
AROC pays out 64.95% of its income as dividend. This is not a sustainable payout ratio.
AROC's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP64.95%
EPS Next 2Y34.48%
EPS Next 3Y26.56%
24.56
+0.73 (+3.06%)
Chartmill FA Rating
GICS SectorEnergy
GICS IndustryGroupEnergy
GICS IndustryEnergy Equipment & Services
Earnings (Last)
Earnings (Next)
Inst Owners96.88%
Inst Owner Change0.22%
Ins Owners2.64%
Ins Owner Change0.45%
Market Cap4.31B
Analysts84.29
Price Target32.39 (31.88%)
Short Float %3.83%
Short Ratio4.02
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.15% |
Yearly Dividend0.67
Dividend Growth(5Y)3.62%
DP64.95%
Div Incr Years2
Div Non Decr Years7
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-4.43%
Min EPS beat(2)-19.32%
Max EPS beat(2)10.45%
EPS beat(4)2
Avg EPS beat(4)-0.83%
Min EPS beat(4)-19.32%
Max EPS beat(4)14.14%
EPS beat(8)4
Avg EPS beat(8)-1.11%
EPS beat(12)6
Avg EPS beat(12)4.54%
EPS beat(16)7
Avg EPS beat(16)5.7%
Revenue beat(2)1
Avg Revenue beat(2)-1.56%
Min Revenue beat(2)-3.21%
Max Revenue beat(2)0.09%
Revenue beat(4)2
Avg Revenue beat(4)-1.02%
Min Revenue beat(4)-3.21%
Max Revenue beat(4)1.04%
Revenue beat(8)4
Avg Revenue beat(8)-0.87%
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)0.79%
PT rev (3m)21.97%
EPS NQ rev (1m)-0.82%
EPS NQ rev (3m)24.09%
EPS NY rev (1m)-0.24%
EPS NY rev (3m)19.23%
Revenue NQ rev (1m)-0.13%
Revenue NQ rev (3m)3.05%
Revenue NY rev (1m)3.05%
Revenue NY rev (3m)4.87%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.39 | ||
| Fwd PE | 14.88 | ||
| P/S | 3.72 | ||
| P/FCF | 61.09 | ||
| P/OCF | 10.03 | ||
| P/B | 3.26 | ||
| P/tB | 3.67 | ||
| EV/EBITDA | 11.34 |
EPS(TTM)1.05
EY4.28%
EPS(NY)1.65
Fwd EY6.72%
FCF(TTM)0.4
FCFY1.64%
OCF(TTM)2.45
OCFY9.97%
SpS6.6
BVpS7.54
TBVpS6.68
PEG (NY)0.41
PEG (5Y)4.18
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.44% | ||
| ROE | 12.84% | ||
| ROCE | 10.05% | ||
| ROIC | 7.43% | ||
| ROICexc | 7.44% | ||
| ROICexgc | 7.76% | ||
| OM | 31.55% | ||
| PM (TTM) | 14.68% | ||
| GM | 60.39% | ||
| FCFM | 6.1% |
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-Score6
Asset Turnover0.3
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.66 | ||
| Debt/FCF | 31.16 | ||
| Debt/EBITDA | 3.91 | ||
| Cap/Depr | 182.21% | ||
| Cap/Sales | 31.02% | ||
| Interest Coverage | 3.03 | ||
| Cash Conversion | 76.4% | ||
| Profit Quality | 41.52% | ||
| Current Ratio | 1.24 | ||
| Quick Ratio | 0.76 | ||
| Altman-Z | 0.74 |
F-Score6
WACC8.61%
ROIC/WACC0.86
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)56.72%
EPS 3Y76.8%
EPS 5Y5.59%
EPS Q2Q%61.9%
EPS Next Y57.24%
EPS Next 2Y34.48%
EPS Next 3Y26.56%
EPS Next 5YN/A
Revenue 1Y (TTM)16.89%
Revenue growth 3Y13.99%
Revenue growth 5Y3.7%
Sales Q2Q%25.74%
Revenue Next Year25.32%
Revenue Next 2Y16.52%
Revenue Next 3Y9.97%
Revenue Next 5YN/A
EBIT growth 1Y41.91%
EBIT growth 3Y37.29%
EBIT growth 5Y12.34%
EBIT Next Year108.4%
EBIT Next 3Y37.58%
EBIT Next 5YN/A
FCF growth 1Y510.64%
FCF growth 3Y-20.33%
FCF growth 5YN/A
OCF growth 1Y38.49%
OCF growth 3Y21.86%
OCF growth 5Y8.17%