Critical Analysis: Archrock (AROC) vs. Its Peers

Archrock (NYSE:AROC) is one of 177 publicly-traded companies in the “Energy Equipment & Services” industry, but how does it contrast to its rivals? We will compare Archrock to similar businesses based on the strength of its profitability, valuation, earnings, institutional ownership, analyst recommendations, dividends and risk.

Profitability

This table compares Archrock and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Archrock	21.84%	22.22%	7.56%
Archrock Competitors	-11.15%	7.20%	1.39%

Insider & Institutional Ownership

95.4% of Archrock shares are held by institutional investors. Comparatively, 48.9% of shares of all “Energy Equipment & Services” companies are held by institutional investors. 2.9% of Archrock shares are held by company insiders. Comparatively, 12.3% of shares of all “Energy Equipment & Services” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Archrock pays an annual dividend of $0.92 per share and has a dividend yield of 2.9%. Archrock pays out 49.5% of its earnings in the form of a dividend. As a group, “Energy Equipment & Services” companies pay a dividend yield of -6.4% and pay out -140.2% of their earnings in the form of a dividend. Archrock has increased its dividend for 3 consecutive years.

Volatility & Risk

Archrock has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500. Comparatively, Archrock’s rivals have a beta of 0.84, indicating that their average stock price is 16% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Archrock and its rivals, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Archrock	1	0	10	0	2.82
Archrock Competitors	1657	6793	8568	483	2.45

Archrock currently has a consensus price target of $42.12, indicating a potential upside of 32.68%. As a group, “Energy Equipment & Services” companies have a potential upside of 21.85%. Given Archrock’s stronger consensus rating and higher probable upside, equities analysts clearly believe Archrock is more favorable than its rivals.

Earnings & Valuation

This table compares Archrock and its rivals gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Archrock	$1.50 billion	$322.29 million	17.07
Archrock Competitors	$3.15 billion	$29.73 million	22.94

Archrock’s rivals have higher revenue, but lower earnings than Archrock. Archrock is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Summary

Archrock beats its rivals on 10 of the 15 factors compared.

Archrock Company Profile

Archrock, Inc., together with its subsidiaries, operates as an energy infrastructure company in the United States. The company operates in two segments, Contract Operations and Aftermarket Services. It engages in the designing, sourcing, owning, installing, operating, servicing, repairing, and maintaining of its owned fleet of natural gas compression equipment to provide natural gas compression services. The company also sells over-the-counter parts and components; and provides operations, major and routine maintenance, overhaul, and reconfiguration services to customers who own compression equipment. It serves integrated and independent oil and natural gas processors, gatherers, and transporters. The company was formerly known as Exterran Holdings, Inc. and changed its name to Archrock, Inc. in November 2015. Archrock, Inc. was founded in 1990 and is headquartered in Houston, Texas.