Archrock Inc
AROC
$34.49
-2.90%
Archrock Inc is an energy infrastructure company focused on midstream natural gas compression. It is a leading provider of compression services and aftermarket support, leveraging its extensive fleet and technical expertise.
AROC
Archrock Inc
$34.49
Investment Opinion: Should I buy AROC Today?
Based on a synthesis of strong fundamentals, positive analyst sentiment, and attractive relative valuation (notably the low PEG ratio), the objective assessment leans positive. However, the stock's significant recent run-up and high leverage warrant caution. The Synthesized Analyst Rating is a 'Hold' with a 'Buy on Dips' bias. The current price level, near the 52-week high, suggests waiting for a better entry point would be prudent for risk-averse investors, while the underlying business strength supports a long-term positive view.
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AROC 12-Month Price Forecast
The data supports a neutral stance. The underlying business is performing well, but the stock's recent explosive performance has likely priced in much of the near-term optimism, creating a balanced risk/reward profile at current levels.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Archrock Inc's 12-month outlook, with a consensus price target around $44.84 and implied upside of +30.0% versus the current price.
Average Target
$44.84
1 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
1
covering this stock
Price Range
$28 - $45
Analyst target range
Wall Street analyst sentiment appears positive, as evidenced by recent institutional ratings. In March 2026, firms including RBC Capital, Wells Fargo, Evercore ISI Group, Citigroup, and Stifel have all reiterated 'Buy', 'Outperform', or 'Overweight' ratings. However, specific consensus target price and ratings distribution data are not available in the provided analyst data, which shows only one analyst covering the stock for revenue estimates.
Bulls vs Bears: AROC Investment Factors
Archrock presents a compelling mix of strong fundamental performance and positive momentum, tempered by its cyclical nature and elevated valuation following a significant rally. The company's high profitability and growth are attractive, but investors must weigh these against sector risks and the stock's proximity to recent highs.
Bullish
- Strong Revenue Growth: Q4 2025 revenue grew 15.5% YoY, showing robust demand.
- High Profitability Margins: Net margin of 30.97% and operating margin of 43.23% in Q4.
- Exceptional Relative Strength: Outperformed S&P 500 by ~39% over 3 and 6 months.
- Attractive Valuation Metrics: Low PEG ratio of 0.18 suggests undervaluation relative to growth.
Bearish
- Elevated Price Near 52-Week High: Trading at $34.49, ~92% of its 52-week high of $37.26.
- High Financial Leverage: Debt-to-equity ratio of 1.62 indicates significant leverage.
- Sector Cyclicality & Volatility: Business tied to natural gas prices and energy capex cycles.
- Recent Price Pullback: Down -2.38% over the past month, showing potential exhaustion.
AROC Technical Analysis
The stock has demonstrated a strong uptrend over the past six months, with the price rising from around $25.87 in early October 2025 to a recent high of $37.04 in March 2026, representing a significant gain. The 3-month and 6-month price changes are +31.39% and +33.32%, respectively, substantially outperforming the broader market as indicated by positive relative strength figures of +38.71 and +38.89 over the same periods.
Short-term performance has been more volatile, with the stock declining -2.38% over the past month, though this still represents a relative strength of +5.49 compared to the S&P 500's -7.87% decline. The price has retreated from its March highs, closing at $34.49 on March 30, 2026, which is a -2.90% drop from the previous close of $35.52.
The current price of $34.49 positions the stock near the upper end of its 52-week range of $20.12 to $37.26, approximately 92% of the 52-week high. This suggests the stock is trading at elevated levels following its substantial rally, though it has pulled back from the recent peak.
Beta
0.91
0.91x market volatility
Max Drawdown
-23.1%
Largest decline past year
52-Week Range
$20-$37
Price range past year
Annual Return
+30.4%
Cumulative gain past year
| Period | AROC Return | S&P 500 |
|---|---|---|
| 1m | -2.4% | -7.9% |
| 3m | +31.4% | -7.3% |
| 6m | +33.3% | -5.6% |
| 1y | +30.4% | +13.0% |
| ytd | +29.5% | -7.3% |
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AROC Fundamental Analysis
Revenue and profitability have shown solid growth. For Q4 2025, revenue was $377.07 million, representing a year-over-year growth of 15.52% compared to the same quarter in 2024. The net income margin for the quarter was a healthy 30.97%, and the operating margin was 43.23%, indicating strong operational efficiency and pricing power.
Financial health is mixed, with a debt-to-equity ratio of 1.62, indicating a leveraged capital structure. However, the company maintains a solid current ratio of 1.54, suggesting adequate short-term liquidity. Free cash flow for the trailing twelve months was positive at $119.64 million, providing flexibility for capital allocation.
Operational efficiency metrics are robust, with a Return on Equity (ROE) of 21.61% and a Return on Assets (ROA) of 8.81% as of the latest data. The company's asset turnover and operational margins have improved year-over-year, reflecting effective management of its compression fleet and service operations.
Quarterly Revenue
$377073000.0B
2025-12
Revenue YoY Growth
+0.15%
YoY Comparison
Gross Margin
+0.52%
Latest Quarter
Free Cash Flow
$119642000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is AROC Overvalued?
Given the company's positive net income, the primary valuation metric is the Price-to-Earnings (P/E) ratio. The trailing P/E ratio is 14.08, while the forward P/E is 14.77, suggesting the market is pricing in stable future earnings. The PEG ratio is 0.18, which is very low and typically indicates the stock may be undervalued relative to its earnings growth potential.
Peer comparison data is not available in the provided inputs. Other valuation metrics include a Price-to-Sales ratio of 3.05, an EV/EBITDA of 8.18, and a Price-to-Book ratio of 3.04. The dividend yield is 3.12%, supported by a payout ratio of 43.94%.
PE
14.1x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 10x~205x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
8.2x
Enterprise Value Multiple
Investment Risk Disclosure
The primary risk for Archrock is its high financial leverage, with a debt-to-equity ratio of 1.62, which could pressure cash flows and limit financial flexibility if interest rates rise or the business cycle turns. As a provider of midstream natural gas compression services, the company is inherently exposed to the cyclicality of the energy sector, including volatility in natural gas prices and capital expenditure decisions by its E&P customers. Furthermore, the stock's technical position near its 52-week high, following a 33% six-month rally, increases its vulnerability to a broader market correction or profit-taking, as evidenced by the recent -2.38% monthly pullback despite positive relative strength.
FAQ
The key risks include financial leverage, with a debt-to-equity ratio of 1.62, which could strain the balance sheet in a downturn. The business is cyclical and tied to natural gas prices and producer capital spending, making it vulnerable to energy sector volatility. Technically, the stock is trading at 92% of its 52-week high after a major rally, increasing its susceptibility to a sharp correction or profit-taking.
The 12-month outlook is for moderate volatility with a neutral bias. The base case (60% probability) sees the stock trading between $30 and $37, supported by steady execution. The bull case (25%) could see a breakout to $42 on stronger growth, while the bear case (15%) risks a pullback towards $20-$28 if sector headwinds emerge. The consensus view is for the stock to consolidate its recent gains.
The valuation picture is mixed. The very low PEG ratio of 0.18 suggests the stock is undervalued relative to its earnings growth potential. However, its Price-to-Sales (3.05) and Price-to-Book (3.04) ratios are not cheap on an absolute basis. With a trailing P/E of 14.08, it trades in line with stable earnings expectations. Overall, it appears fairly valued after its recent rally, not significantly overvalued or undervalued.
AROC is a fundamentally strong company, but its attractiveness as a buy is tempered by its recent price action. With a 33% gain over six months and trading near its 52-week high, the stock appears fairly valued in the short term. The low PEG ratio of 0.18 and strong Q4 margins are positive, yet the high debt-to-equity ratio of 1.62 adds risk. A 'Hold' or 'Buy on Dips' strategy is more prudent than chasing the current price.
AROC is more suitable for a long-term investment horizon. Its business model and dividend yield (3.12%) support a buy-and-hold strategy for investors comfortable with energy sector cycles. The stock's recent high volatility and proximity to its 52-week high make it a challenging short-term trade, as it may be prone to consolidation or pullbacks despite its strong momentum.