Investment Thesis
Archrock demonstrates strong operational performance with robust 28.7% revenue growth and exceptional profitability margins (48.6% gross, 28.4% operating). The company generates substantial operating cash flow ($622.1M) that exceeds capital requirements, though elevated leverage (1.62x debt-to-equity) and tight liquidity warrant monitoring.
AROC Strengths
- Strong revenue growth of 28.7% YoY indicates robust demand and market positioning in natural gas transmission
- Excellent profitability with 21.6% net margin and 28.4% operating margin demonstrating operational efficiency
- Healthy interest coverage ratio of 15.5x provides substantial debt service capacity despite high leverage
- Positive free cash flow generation of $119.6M after capital expenditures supports sustainability
- High ROE of 21.6% indicates effective capital deployment and shareholder value creation
- Strong insider activity with 33 Form 4 filings suggests management confidence
AROC Risks
- Elevated leverage with debt-to-equity ratio of 1.62x and $2.4B long-term debt creates refinancing risk in rising rate environment
- Minimal cash reserves of $1.6M provide insufficient liquidity buffer for unexpected disruptions
- Quick ratio of 0.99x indicates potential working capital pressure and limited liquid asset coverage
- FCF margin of 8.0% is modest relative to revenue growth, suggesting capital intensity may constrain distributions
- Natural gas sector exposure to regulatory and energy transition risks over long term
Key Metrics to Watch
- Operating cash flow sustainability and capital expenditure trends
- Debt levels and refinancing activities given current leverage profile
- Gross and operating margin maintenance amid commodity price fluctuations
- Revenue growth sustainability beyond the strong 28.7% YoY comparison
- Free cash flow conversion and cash balance accumulation
AROC Financial Metrics
AROC Profitability Ratios
AROC Balance Sheet & Liquidity
AROC 5-Year Financial Trend
5-Year Trend Summary: Archrock, Inc.'s revenue has grown significantly by 54% over the 5-year period, indicating strong business expansion. The most recent EPS of $0.67 reflects profitable operations.
AROC Growth Metrics (YoY)
AROC Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $292.2M | $37.5M | $0.22 |
| Q2 2025 | $270.5M | $34.4M | $0.22 |
| Q1 2025 | $268.5M | $40.5M | $0.26 |
| Q3 2024 | $253.4M | $30.9M | $0.20 |
| Q2 2024 | $247.5M | $24.7M | $0.16 |
| Q1 2024 | $229.8M | $16.5M | $0.10 |
| Q3 2023 | $213.7M | $15.4M | $0.10 |
| Q2 2023 | $215.8M | $16.7M | $0.11 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
AROC Capital Allocation
AROC SEC Filings
Access official SEC EDGAR filings for Archrock, Inc. (CIK: 0001389050)