Should you buy USA Compression Partners (USAC)?
Updated
USA Compression Partners combines top-decile business quality (quality score 8.1 out of 10, Rule of 40 at 59, return on equity at 85%) with strong revenue growth of 35% year-over-year, but very high leverage (debt-to-equity of 9.5) and two consecutive earnings misses dampen the near-term setup.
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Engine methodology range
Range computation requires sufficient peer-comparable data; available for tickers with peer_count ≥3.
What the engine is tracking
| Pillar | Expectation | Trend |
|---|---|---|
Revenue growth of 35% year-over-year ranks USA Compression as an industry growth leader, reflecting strong demand for natural gas compression infrastructure as production volumes expand. Growth breakdown | Revenue growth should remain above 15% year-over-year over the next 12 months, sustaining the industry-leading growth position. | →Stable |
| CounterTwo consecutive earnings misses in the most recent quarters suggest the growth rate is not translating cleanly to the bottom line, possibly due to rising operating costs or pricing pressure. | ||
A debt-to-equity ratio of 9.5 is among the highest in the screened universe, and the dividend distribution yield is flagged as potentially unsafe relative to coverage, creating meaningful financial risk if earnings soften. Bear case | The leverage ratio should decline below 7.0 within 12 months as cash flows are used to pay down debt, improving financial stability. | →Stable |
| CounterLimited partnerships in the midstream energy sector routinely carry high debt-to-equity ratios as part of their business model, and the 198% free cash flow to net income conversion suggests strong actual cash coverage. | ||
USA Compression Partners posts a return on equity of 85%, a Piotroski financial strength score of 8 out of 9, and a Rule of 40 score of 59, placing it in the top tier of business quality among all screened names in the energy services sector. Quality breakdown | Return on equity should remain above 60% and the Piotroski score should stay at 7 or above over the next 12 months. | →Stable |
| CounterThe extreme return on equity is partly a function of very high financial leverage at 9.5 debt-to-equity, meaning returns are magnified by debt rather than purely by operating efficiency. | ||
Revenue growth of 35% year-over-year ranks USA Compression as an industry growth leader, reflecting strong demand for natural gas compression infrastructure as production volumes expand.
→Stable- Expectation
- Revenue growth should remain above 15% year-over-year over the next 12 months, sustaining the industry-leading growth position.
CounterTwo consecutive earnings misses in the most recent quarters suggest the growth rate is not translating cleanly to the bottom line, possibly due to rising operating costs or pricing pressure.
A debt-to-equity ratio of 9.5 is among the highest in the screened universe, and the dividend distribution yield is flagged as potentially unsafe relative to coverage, creating meaningful financial risk if earnings soften.
→Stable- Expectation
- The leverage ratio should decline below 7.0 within 12 months as cash flows are used to pay down debt, improving financial stability.
CounterLimited partnerships in the midstream energy sector routinely carry high debt-to-equity ratios as part of their business model, and the 198% free cash flow to net income conversion suggests strong actual cash coverage.
USA Compression Partners posts a return on equity of 85%, a Piotroski financial strength score of 8 out of 9, and a Rule of 40 score of 59, placing it in the top tier of business quality among all screened names in the energy services sector.
→Stable- Expectation
- Return on equity should remain above 60% and the Piotroski score should stay at 7 or above over the next 12 months.
CounterThe extreme return on equity is partly a function of very high financial leverage at 9.5 debt-to-equity, meaning returns are magnified by debt rather than purely by operating efficiency.
▸ Show 1 more pillar▾ Show fewer
USA Compression missed earnings estimates in both of its most recent quarters with average misses of about 10%, indicating that analyst models outpace what the business is currently delivering.
→Stable- Expectation
- The company should return to beating estimates in at least 1 of the next 2 quarters, reversing the consecutive miss streak.
CounterThe two prior quarters were beats, suggesting this is a short-term earnings variability pattern rather than a structural deterioration in the business model.
→ Full pillar scorecard with all 4 pillars + per-dimension breakdown
When this thesis breaks
Falsifiable conditions per pillar — any one trip warrants review independent of price action. Engine-derived; not personalized advice.
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1USA Compression Partners posts a return on equity of 85%, a Piotroski financial strength score of 8 out of 9, and a Rule of 40 score of 59, placing it in the top tier of business quality among all screened names in the energy services sector.
Trip ifReturn on equity falls below 50% in any of the next 4 reported quarters.
- P2Revenue growth of 35% year-over-year ranks USA Compression as an industry growth leader, reflecting strong demand for natural gas compression infrastructure as production volumes expand.
Trip ifRevenue growth falls below 10% year-over-year in at least 2 of the next 4 quarters.
- P3A debt-to-equity ratio of 9.5 is among the highest in the screened universe, and the dividend distribution yield is flagged as potentially unsafe relative to coverage, creating meaningful financial risk if earnings soften.
Trip ifDebt-to-equity ratio rises above 11.0, exceeding the current 9.5 level.
- P4USA Compression missed earnings estimates in both of its most recent quarters with average misses of about 10%, indicating that analyst models outpace what the business is currently delivering.
Trip ifEPS surprise falls below -15% in at least 2 of the next 4 quarters.
How the engine reached this verdict
TrendMatrix's engine output for USA Compression Partners, LP (USAC) is HOLD_IF_HOLDING with medium conviction, score 6.6/10 at $26.13. The C-path quality+growth combination cleared its gates — quality 8.1 and growth 10.0 — with -0.16 asymmetric R:R supporting the read.
On the bull side: High-quality business; Attractive valuation; Strong growth profile. On the bear side: Analyst target reached - limited upside remaining; Leverage penalty (D/E 9.5): -1.5; Consecutive earnings misses (2). Active engine warnings: V8: Target reached (-1.2% upside), L3:NEWS_MOD=-1: STRONG_BUY_WAIT → HOLD_IF_HOLDING, V9 Gate Failed: MOMENTUM:4.5<4.5.
The engine is not issuing fresh-money entry targets at the current verdict. The technical entry zone is around — with a technical stop near $24.30 for existing positions. Asymmetric R:R is 1.36, below the threshold (≥2.0) at which the engine would actively flag fresh capital. The engine's sizing output: 0.5% of portfolio at this asymmetry level (none-conviction tier).
HOLD flips toward BUY_WAIT if momentum at 4.5 vs threshold 4.5 clears AND a co-confirming gate triggers. HOLD flips toward SELL if any of the currently-passing gates drop below threshold OR three or more dimensions fall below 4 simultaneously.
For the full 10-dimension breakdown + V9 gate detail: Why TrendMatrix rates USAC — 10-dimension breakdown →
Bull case
- ▸High-quality business
- ▸Attractive valuation
- ▸Strong growth profile
Bear case
- ▸Analyst target reached - limited upside remaining
- ▸Leverage penalty (D/E 9.5): -1.5
- ▸Consecutive earnings misses (2)