We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Many energy stocks remain firmly in favor as elevated crude prices provide another catalyst for the sector. WTI crude is hovering near $90 per barrel amid renewed Middle East supply concerns, while the Energy Select Sector SPDR ETF (XLE - Free Report) ) just gained over 8% in August and entered September near record highs.
However, Archrock (AROC - Free Report) ) may be one energy stock investors want to avoid for now. The natural gas compression specialist currently lands a Zacks Rank #5 (Strong Sell) following back-to-back earnings disappointments and a sharp deterioration in analysts' EPS expectations.
What Does Archrock Do?
Archrock provides natural gas compression services, primarily through long-term contract operations, along with aftermarket maintenance and parts services. Its compression equipment increases gas pressure so natural gas can move efficiently through gathering, processing, and transportation infrastructure.
Importantly, Archrock isn't an oil producer, meaning higher crude prices don't translate as directly into stronger profits. Instead, its outlook is tied more closely to natural gas infrastructure activity, equipment utilization, pricing, and operating costs.
Back-to-Back Earnings Misses
Archrock's Q2 results in August extended a disappointing earnings trend. Adjusted EPS of $0.38 missed Q2 expectations of $0.46 by 17%, while revenue of $371.24 million fell nearly 5% short of the $390.4 million consensus and declined 3% year over year.
The biggest weakness came from aftermarket services, where revenue plunged to $42 million from $64.8 million a year earlier as parts sales declined and the typical mid-year increase in major maintenance activity failed to materialize.
Archrock subsequently tightened its 2026 adjusted EBITDA outlook to $865-$885 million from $865-$915 million, citing higher make-ready and lubricant costs, softer aftermarket demand and elevated selling, general, and administrative (SG&A) expenses.
Making matters worse, Q2 marked Archrock's second consecutive top-and bottom-line miss. In Q1, adjusted EPS of $0.42 missed estimates of $0.47, while revenue of $373.77 million came in below the $376.69 million consensus.
Image Source: Zacks Investment Research
EPS Estimates Keep Heading Lower
Most concerning for investors is what has happened since the Q2 report. Over the last 30 days, the Zacks Consensus EPS estimate for fiscal 2026 has fallen nearly 9% from $1.90 to $1.73, while the FY27 EPS estimate has dropped roughly 7% from $2.29 to $2.14.
The current-quarter EPS estimate has been slashed 10% from $0.50 to $0.45, while the next-quarter consensus has fallen from $0.51 to $0.47. Notably, all four estimates have moved lower again during just the last seven days, signaling that analysts may still be recalibrating expectations following Archrock's Q2 disappointment.
Image Source: Zacks Investment Research
It May Be Time to Take Profits
Although Archrock shares are still up a very respectable 20% year to date, the technical picture is also starting to deteriorate. To that point, AROC has fallen further below both its 50-day and 200-day simple moving averages (SMA) of roughly $34 and $32 a share, respectively.
Image Source: Zacks Investment Research
Bottom Line
Archrock still has attractive long-term exposure to rising natural gas infrastructure demand, and its core contract compression business remains healthy. That said, two straight earnings and revenue misses, reduced guidance and broad-based downward EPS revisions make the near-term risk/reward far less compelling even with AROC shares trading at a reasonable 18X forward P/E multiple.
With plenty of energy stocks benefiting more directly from today's elevated commodity-price environment, Archrock's Zacks Rank #5 (Strong Sell) suggests investors may be better served looking elsewhere in the sector until its earnings outlook stabilizes.
View the Zacks #1 Rank List
Bear of the Day: Archrock (AROC)
Many energy stocks remain firmly in favor as elevated crude prices provide another catalyst for the sector. WTI crude is hovering near $90 per barrel amid renewed Middle East supply concerns, while the Energy Select Sector SPDR ETF (XLE - Free Report) ) just gained over 8% in August and entered September near record highs.
However, Archrock (AROC - Free Report) ) may be one energy stock investors want to avoid for now. The natural gas compression specialist currently lands a Zacks Rank #5 (Strong Sell) following back-to-back earnings disappointments and a sharp deterioration in analysts' EPS expectations.
What Does Archrock Do?
Archrock provides natural gas compression services, primarily through long-term contract operations, along with aftermarket maintenance and parts services. Its compression equipment increases gas pressure so natural gas can move efficiently through gathering, processing, and transportation infrastructure.
Importantly, Archrock isn't an oil producer, meaning higher crude prices don't translate as directly into stronger profits. Instead, its outlook is tied more closely to natural gas infrastructure activity, equipment utilization, pricing, and operating costs.
Back-to-Back Earnings Misses
Archrock's Q2 results in August extended a disappointing earnings trend. Adjusted EPS of $0.38 missed Q2 expectations of $0.46 by 17%, while revenue of $371.24 million fell nearly 5% short of the $390.4 million consensus and declined 3% year over year.
The biggest weakness came from aftermarket services, where revenue plunged to $42 million from $64.8 million a year earlier as parts sales declined and the typical mid-year increase in major maintenance activity failed to materialize.
Archrock subsequently tightened its 2026 adjusted EBITDA outlook to $865-$885 million from $865-$915 million, citing higher make-ready and lubricant costs, softer aftermarket demand and elevated selling, general, and administrative (SG&A) expenses.
Making matters worse, Q2 marked Archrock's second consecutive top-and bottom-line miss. In Q1, adjusted EPS of $0.42 missed estimates of $0.47, while revenue of $373.77 million came in below the $376.69 million consensus.
Image Source: Zacks Investment Research
EPS Estimates Keep Heading Lower
Most concerning for investors is what has happened since the Q2 report. Over the last 30 days, the Zacks Consensus EPS estimate for fiscal 2026 has fallen nearly 9% from $1.90 to $1.73, while the FY27 EPS estimate has dropped roughly 7% from $2.29 to $2.14.
The current-quarter EPS estimate has been slashed 10% from $0.50 to $0.45, while the next-quarter consensus has fallen from $0.51 to $0.47. Notably, all four estimates have moved lower again during just the last seven days, signaling that analysts may still be recalibrating expectations following Archrock's Q2 disappointment.
Image Source: Zacks Investment Research
It May Be Time to Take Profits
Although Archrock shares are still up a very respectable 20% year to date, the technical picture is also starting to deteriorate. To that point, AROC has fallen further below both its 50-day and 200-day simple moving averages (SMA) of roughly $34 and $32 a share, respectively.
Image Source: Zacks Investment Research
Bottom Line
Archrock still has attractive long-term exposure to rising natural gas infrastructure demand, and its core contract compression business remains healthy. That said, two straight earnings and revenue misses, reduced guidance and broad-based downward EPS revisions make the near-term risk/reward far less compelling even with AROC shares trading at a reasonable 18X forward P/E multiple.
With plenty of energy stocks benefiting more directly from today's elevated commodity-price environment, Archrock's Zacks Rank #5 (Strong Sell) suggests investors may be better served looking elsewhere in the sector until its earnings outlook stabilizes.