Value
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.1 |
| P/S | 8.0 |
| EV/EBITDA | 6.8 |
| Fwd P/E | 8.6 |
| PEG | 6.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 13.2x
- ▸PEG: 1.24
- ▸Attractively valued
AROC · Why this verdict
Why Archrock (AROC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.9/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Archrock has strong margins and best-in-class peer returns with 16.3% upside to the analyst target, but declining revenue, two recent earnings misses, leverage and heavy contract-operations concentration make it a hold into earnings tomorrow.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Contract operations represent 85.0% of revenue, operations are concentrated in the Permian and Eagle Ford, and debt-to-equity of 1.5 triggers a leverage penalty. Bear case | Leverage stays at or below 1.5 and customer activity in the core basins holds. | ↓Deteriorating |
| CounterContract compression services are typically long-term and recurring, which provides visibility despite the concentration. | ||
Archrock earns strong margins of 22% and ranks best in class on margins and superior on ROE versus peers. Quality breakdown | Margins stay near 22% and peer quality ranking holds. | ↑Improving |
| CounterFree cash flow is only 73% of net income and the Rule of 40 score of 13 fails, so margin strength is not translating into growth. | ||
Archrock missed estimates in 2 of the last 4 quarters, by 22.8% in August and 13.3% in May, with the next report due tomorrow, November 2. Earnings | The November 2 report beats estimates and ends the miss pattern. | ↑Improving |
| CounterA 69% beat in February shows results are volatile in both directions, so the misses may be timing noise. | ||
Revenue is down 3% year over year and growth ranks near the bottom of peers (growth rank 1.2), though the stock is still valued at a forward P/E of 14.6x. Growth breakdown | Revenue growth turns positive within 12 months. | ↑Improving |
| CounterEarnings growth is positive and margins are strong, so flat revenue may still support earnings through mix and pricing. | ||
Analyst upside is 16.3% against 11.8% downside, a reward-to-risk of 1.38, with momentum at 6.8 and rising OBV. Estimated upside | Price moves toward the $36.87 target after earnings. | ↑Improving |
| CounterWith earnings in 1 day, a 3.30 put/call ratio and 78% implied volatility, the near-term outcome is a coin flip around the report. | ||
Contract operations represent 85.0% of revenue, operations are concentrated in the Permian and Eagle Ford, and debt-to-equity of 1.5 triggers a leverage penalty.
↓DeterioratingBear case
- Expectation
- Leverage stays at or below 1.5 and customer activity in the core basins holds.
CounterContract compression services are typically long-term and recurring, which provides visibility despite the concentration.
Archrock earns strong margins of 22% and ranks best in class on margins and superior on ROE versus peers.
↑ImprovingQuality breakdown
- Expectation
- Margins stay near 22% and peer quality ranking holds.
CounterFree cash flow is only 73% of net income and the Rule of 40 score of 13 fails, so margin strength is not translating into growth.
Archrock missed estimates in 2 of the last 4 quarters, by 22.8% in August and 13.3% in May, with the next report due tomorrow, November 2.
↑ImprovingEarnings
- Expectation
- The November 2 report beats estimates and ends the miss pattern.
CounterA 69% beat in February shows results are volatile in both directions, so the misses may be timing noise.
Revenue is down 3% year over year and growth ranks near the bottom of peers (growth rank 1.2), though the stock is still valued at a forward P/E of 14.6x.
↑ImprovingGrowth breakdown
- Expectation
- Revenue growth turns positive within 12 months.
CounterEarnings growth is positive and margins are strong, so flat revenue may still support earnings through mix and pricing.
Analyst upside is 16.3% against 11.8% downside, a reward-to-risk of 1.38, with momentum at 6.8 and rising OBV.
↑ImprovingEstimated upside
- Expectation
- Price moves toward the $36.87 target after earnings.
CounterWith earnings in 1 day, a 3.30 put/call ratio and 78% implied volatility, the near-term outcome is a coin flip around the report.
Per-dimension breakdown
Quality
7.7/10data confidence 71%| Component | Sub-score |
|---|---|
| Gross margin | 9.5 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Moat | 4.8 |
| Piotroski F | 4.4 |
- ▸Strong margins: 23%
- ▸No competitive moat
- ▸High-quality business
Growth
3.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.8 |
| EPS growth | 6.0 |
- ▸Declining revenue: -3%
Momentum
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 7.7 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 8.7 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+2.2%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.5 |
| Analyst rating | 7.9 |
| Price target | 9.5 |
- ▸Light analyst coverage (8.0) — signal dampened
- ▸Analyst upside: 48%
Insider
5.2/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.5 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.4 |
| quality rank | 9.7 |
| growth rank | 0.9 |
- ▸Best-in-class margins
Technical
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.1 |
| support resistance | 8.0 |
| 52w position | 3.7 |
Risk (lower is worse)
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.4 |
| days to cover | 6.6 |
| volatility | 0.9 |
| put call | 0.0 |
| implied vol | 6.4 |
| beta | 7.4 |
| debt equity | 4.0 |
- ▸Elevated put/call: 6.14
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 7.1 |
| dividend safety | 4.5 |
| news activity | 7.0 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 3.2%
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier -1 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=-1Passed (6)
- MOMENTUM:4.8>=4.5
- ASYMMETRY:3.1>=1.5
- INSIDER:OK
- EARNINGS_PROXIMITY:110d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (2)
- MOMENTUM:4.8<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
3.12
Upside
+28.9%
Downside
9.3%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:4.8>=4.5. Top dim: Value at 7.8; weakest: Growth at 3.9. No conviction either direction.
The strongest dimensions are Value at 7.8, Quality at 7.7, and Sentiment at 7.6; the weakest are Growth at 3.9, Peer rank at 4.0, and Risk (lower is worse) at 4.7. The V9 engine cleared all gates with 2 warnings, producing an asymmetric reward-to-risk of 3.12 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Margins Superior Roe
Trip ifNet margin falls below 15% from current 22%.
- P2Recent Earnings Misses
Trip ifEPS surprise stays below 0% in the November 2 report and the following quarter.
- P3Declining Revenue Weak Growth
Trip ifRevenue declines more than 8% year over year.
- P4Concentration And Leverage
Trip ifDebt-to-equity exceeds 2.0 from current 1.5.
- P5Analyst Upside Moderate Asymmetry
Trip ifPrice falls below the $28.49 stop level, more than 10% below $31.70.