ARCHROCK INC (AROC) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:AROC - US03957W1062 - Common Stock
27.85 USD
-0.06 (-0.21%)
27.85 USD
0 (0%)
We assign a fundamental rating of 6 out of 10 to AROC. AROC was compared to 61 industry peers in the Energy Equipment & Services industry. AROC scores excellent on profitability, but there are concerns on its financial health. AROC is not priced too expensively while it is growing strongly. Keep and eye on this one! AROC also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- AROC had positive earnings in the past year.
- In the past year AROC had a positive cash flow from operations.
- Of the past 5 years AROC 4 years were profitable.
- Each year in the past 5 years AROC had a positive operating cash flow.
1.2 Ratios
- With a decent Return On Assets value of 5.95%, AROC is doing good in the industry, outperforming 72.58% of the companies in the same industry.
- The Return On Equity of AROC (18.43%) is better than 91.94% of its industry peers.
- The Return On Invested Capital of AROC (9.15%) is better than 72.58% of its industry peers.
- AROC had an Average Return On Invested Capital over the past 3 years of 6.45%. This is significantly below the industry average of 12.92%.
- The last Return On Invested Capital (9.15%) for AROC is above the 3 year average (6.45%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.95% | ||
| ROE | 18.43% | ||
| ROIC | 9.15% |
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 (18.22%) is better than 96.77% of its industry peers.
- AROC's Profit Margin has improved in the last couple of years.
- AROC has a better Operating Margin (36.11%) than 100.00% of its industry peers.
- AROC's Operating Margin has improved in the last couple of years.
- AROC's Gross Margin of 64.00% is amongst the best of the industry. AROC outperforms 96.77% of its industry peers.
- AROC's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 36.11% | ||
| PM (TTM) | 18.22% | ||
| GM | 64% |
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) just above the Cost of Capital (WACC), AROC is creating some value.
- The number of shares outstanding for AROC has been increased compared to 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
- Based on the Altman-Z score of 0.99, we must say that AROC is in the distress zone and has some risk of bankruptcy.
- Looking at the Altman-Z score, with a value of 0.99, AROC is doing worse than 75.81% of the companies in the same industry.
- AROC has a debt to FCF ratio of 132.56. This is a negative value and a sign of low solvency as AROC would need 132.56 years to pay back of all of its debts.
- The Debt to FCF ratio of AROC (132.56) is worse than 64.52% of its industry peers.
- AROC has a Debt/Equity ratio of 1.80. This is a high value indicating a heavy dependency on external financing.
- AROC's Debt to Equity ratio of 1.80 is on the low side compared to the rest of the industry. AROC is outperformed by 83.87% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.8 | ||
| Debt/FCF | 132.56 | ||
| Altman-Z | 0.99 |
ROIC/WACC1.1
WACC8.35%
2.3 Liquidity
- AROC has a Current Ratio of 1.56. 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 (1.56) than 69.35% of its industry peers.
- AROC has a Quick Ratio of 1.01. This is a normal value and indicates that AROC is financially healthy and should not expect problems in meeting its short term obligations.
- Looking at the Quick ratio, with a value of 1.01, AROC is doing worse than 72.58% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.56 | ||
| Quick Ratio | 1.01 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an impressive 67.39% over the past year.
- The Earnings Per Share has been growing slightly by 5.59% on average over the past years.
- The Revenue has grown by 31.94% in the past year. This is a very strong growth!
- AROC shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.70% yearly.
EPS 1Y (TTM)67.39%
EPS 3Y76.8%
EPS 5Y5.59%
EPS Q2Q%81.82%
Revenue 1Y (TTM)31.94%
Revenue growth 3Y13.99%
Revenue growth 5Y3.7%
Sales Q2Q%30.9%
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 22.67% on average per year.
- Based on estimates for the next years, AROC will show a quite strong growth in Revenue. The Revenue will grow by 10.34% on average per year.
EPS Next Y52.03%
EPS Next 2Y35.15%
EPS Next 3Y27.39%
EPS Next 5Y22.67%
Revenue Next Year28.35%
Revenue Next 2Y16.99%
Revenue Next 3Y13.09%
Revenue Next 5Y10.34%
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
- The Price/Earnings ratio is 18.08, which indicates a rather expensive current valuation of AROC.
- 77.42% of the companies in the same industry are more expensive than AROC, based on the Price/Earnings ratio.
- Compared to an average S&P500 Price/Earnings ratio of 27.21, AROC is valued a bit cheaper.
- AROC is valuated correctly with a Price/Forward Earnings ratio of 14.52.
- Based on the Price/Forward Earnings ratio, AROC is valued cheaply inside the industry as 87.10% of the companies are valued more expensively.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, AROC is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.08 | ||
| Fwd PE | 14.52 |
4.2 Price Multiples
- 69.35% of the companies in the same industry are cheaper than AROC, based on the Enterprise Value to EBITDA ratio.
- Based on the Price/Free Cash Flow ratio, AROC is valued a bit more expensive than the industry average as 64.52% of the companies are valued more cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 252.9 | ||
| EV/EBITDA | 9.75 |
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.
- AROC has an outstanding profitability rating, which may justify a higher PE ratio.
- A more expensive valuation may be justified as AROC's earnings are expected to grow with 27.39% in the coming years.
PEG (NY)0.35
PEG (5Y)3.24
EPS Next 2Y35.15%
EPS Next 3Y27.39%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 3.01%, AROC has a reasonable but not impressive dividend return.
- Compared to an average industry Dividend Yield of 1.14, AROC pays a better dividend. On top of this AROC pays more dividend than 87.10% of the companies listed in the same industry.
- AROC's Dividend Yield is rather good when compared to the S&P500 average which is at 1.81.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.01% |
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
- 51.65% 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.
DP51.65%
EPS Next 2Y35.15%
EPS Next 3Y27.39%
ARCHROCK INC / AROC FAQ
What is the fundamental rating for AROC stock?
ChartMill assigns a fundamental rating of 6 / 10 to AROC.
What is the valuation status of ARCHROCK INC (AROC) stock?
ChartMill assigns a valuation rating of 5 / 10 to ARCHROCK INC (AROC). This can be considered as Fairly Valued.
What is the profitability of AROC stock?
ARCHROCK INC (AROC) has a profitability rating of 8 / 10.
Can you provide the PE and PB ratios for AROC stock?
The Price/Earnings (PE) ratio for ARCHROCK INC (AROC) is 18.08 and the Price/Book (PB) ratio is 3.43.
How sustainable is the dividend of ARCHROCK INC (AROC) stock?
The dividend rating of ARCHROCK INC (AROC) is 7 / 10 and the dividend payout ratio is 51.65%.