Archrock Inc (NYSE:AROC), a well-respected company in the Oil & Gas industry, is currently experiencing a daily loss of 3.7%. Additionally, the company’s three-month change has seen a decline of 25.11%, indicating potential headwinds. The GF Score, a stock performance ranking system developed by GuruFocus, reveals that Archrock Inc’s rankings in financial strength, growth, and valuation have diminished, suggesting that it may not live up to its historical performance.
The GF Score ranges from 0 to 100, with 100 being the highest rank. Archrock Inc has been assigned a GF Score of 59, indicating poor future outperformance potential. This score is based on five aspects of valuation that have been found to be closely correlated to the long-term performance of stocks.
Archrock Inc is an energy infrastructure company that focuses on midstream natural gas compression. It provides services to help customers produce, compress, and transport natural gas. The company has two business segments: Contract Operations and Aftermarket Services. Under contract operations, Archrock Inc offers services such as designing, owning, installing, operating, and maintaining equipment to meet customers’ natural gas compression needs. Aftermarket Services provides a range of services to support customers who own compression equipment, including operations, maintenance, overhaul, and reconfiguration services.
When analyzing the financial strength of Archrock Inc, concerns arise. The company’s interest coverage ratio of 1.79 positions it worse than 86.7% of companies in the Oil & Gas industry. This indicates potential challenges in handling interest expenses on outstanding debt. Moreover, the Altman Z-Score of -0.02 suggests that the company may face financial distress in the future. Archrock Inc’s low cash-to-debt ratio of 0 and debt-to-Ebitda ratio of 4.59 further highlight struggles in managing debt levels.
In terms of growth prospects, Archrock Inc has seen a decline in revenue by -7.7% per year over the past three years. This underperforms worse than 81.21% of companies in the Oil & Gas industry. Stagnating revenues raise concerns in a fast-evolving market. Additionally, the company’s earnings before interest, taxes, depreciation, and amortization have declined over the past five years, indicating potential challenges in profitability.
In conclusion, Archrock Inc’s GF Score and financial metrics suggest potential underperformance. Despite its history in the Oil & Gas industry, concerns about financial health and growth prospects raise doubts about its ability to maintain its past performance. Investors should carefully consider these factors when making investment decisions.
– GF Score: A stock performance ranking system developed by GuruFocus that uses five aspects of valuation to assess a company’s potential for outperformance.
– Oil & Gas Industry: The industry involved in exploration, extraction, refining, and marketing of oil and gas resources.
– Interest Coverage Ratio: A measure of a company’s ability to pay interest expenses on its outstanding debt. A higher ratio indicates better coverage.
– Altman Z-Score: A formula that measures the likelihood of a company going into bankruptcy within two years. A score below 1.81 indicates potential financial distress.
– Cash-to-Debt Ratio: A ratio that shows a company’s ability to pay off its current liabilities using its cash reserves.
– Debt-to-Ebitda Ratio: A measure of a company’s ability to repay its debt using its Ebitda (earnings before interest, taxes, depreciation, and amortization) generated.
– Ebitda: Earnings before interest, taxes, depreciation, and amortization. It measures a company’s operating performance.
– Revenue: The income generated by a company from its primary business activities.
– GuruFocus: GF Score Screen