A month has gone by since the last earnings report for USA Compression Partners (USAC Quick QuoteUSAC - Free Report) . Shares have added about 11.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is USA Compression due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

USA Compression Q3 Earnings Beat Estimates, Revenues Miss Mark

USA Compression Partners reported third-quarter 2020 adjusted net loss per unit of 6 cents, narrower than the Zacks Consensus Estimate of a loss of 8 cents. The outperformance reflected the firm’s cost-cutting initiatives and stability in business.

However, the bottom line compared unfavorably with the year-ago adjusted profit of 2 cents due to lower utilization.

Revenues of $161.7 million were 8% below the year-ago quarter and missed the Zacks Consensus Estimate of $163 million due to lower-than-expected revenue-generating horsepower capacity, which, at 3,042,786 horsepower, fell short of the Zacks Consensus Estimate of 3,100,000 horsepower.

Adjusted EBITDA remained essentially unchanged year over year at $103.9 million. The partnership’s distributable cash flow rose from $54.9 million in the prior-year quarter to $56.9 million.

The partnership reported operating cash flow of $48.2 million in the quarter. This marked a decline from the $61.3 million that it had generated in the prior-year quarter. But gross operating margin, at 71.1%, marked an improvement over the year-ago period’s 67.3%.

In the third quarter, the partnership’s revenue-generating horsepower capacity decreased 6.6% from last year’s corresponding period to 3,042,786 horsepower.  Moreover, the average monthly revenue per horsepower fell to $16.62 from $16.73 in the third quarter of 2019. Further, USA Compression Partners’ average quarterly horsepower utilization rate came in at 83.9%, down from 93.9% in the year-ago period.

DCF, Capex & Balance Sheet

USA Compression Partners reported that its DCF available to limited partners for the third quarter totaled $56.9 million (providing 1.12X distribution coverage), up 3.6% from the year-ago level. Notably, on Oct 15, the partnership announced third-quarter cash distribution of 52.50 cents per unit ($2.10 on an annualized basis).

USA Compression Partners spent $15.3 million on growth capex, which included the purchase of 11,000 new horsepower.The partnership’s maintenance capex consisted of $4.7million.

As of Sep 30, 2020, the partnership had $1.9 billion in net long-term debt. Net debt-to-capitalization was approximately 82.9%.

Guidance

USA Compression Partners increased its growth capital spending guidance to $90-$100 million for 2020. The previous range was from $80 million to $90 million. The partnership is now projecting full-year DCF between $210 million and $220 million, up from $195-$215 million before. Meanwhile it sees adjusted EBITDA of $405-$415 million (compared to $395-$415 million earlier).

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, USA Compression has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

USA Compression has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.