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Why Is Archrock Inc. (AROC) Down 12.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Archrock Inc. (AROC - Free Report) . Shares have lost about 12.5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Archrock Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
Archrock Q1 Earnings & Revenues Miss Estimates
Archrock reported first-quarter 2026 adjusted earnings of 42 cents per share, which missed the Zacks Consensus Estimate of 47 cents by 10.6%. The bottom line remained flat year over year.
The Houston, TX-based oil and gas equipment and services company generated total quarterly revenues of $373.8 million, up 7.7% year over year from $347.2 million reported in the year-ago quarter, reflecting higher contract operations activity and increased pricing. The figure missed the Zacks Consensus Estimate of $376.7 million by 0.8%.
The lower-than-expected quarterly results were driven by higher selling, general and administrative (SG&A) costs and a non-cash impairment charge.
AROC’s Contract Operations Continued to Drive Growth
Contract operations remained the primary growth engine. Segment revenues increased 10% year over year to $330.9 million from $300.4 in the year-ago quarter, supported by higher operating horsepower and pricing. Average operating horsepower at the quarter-end was 4.5 million compared with 4.3 million a year ago, while utilization is at 95% compared with the year-ago period’s figure of 96%, underscoring the durability of demand for its compression services.
Profitability in the segment also improved on a year-ago basis. Contract operations adjusted gross margin increased 13% to $237.6 million from $210.6 million recorded in the prior-year period. Contract operations adjusted gross margin percentage expanded to 72% from 70% in the year-ago period, reflecting operating execution and pricing carryover.
Archrock’s Aftermarket Services Softened on Seasonality
Aftermarket services were weaker year over year. Segment revenues were $42.9 million, down from $46.8 million recorded in the first quarter of 2025, reflecting lower service activity and a seasonal slowdown.
Margins compressed modestly as well. Aftermarket services adjusted gross margin was $9.8 million compared with $11.5 million a year ago. The aftermarket services adjusted gross margin percentage declined to 23% from 25% in the year-ago quarter.
AROC’s Cost Structure Shifts Higher in the Quarter
The earnings miss reflected pressure from operating costs that came in above the level implied by consensus expectations. Selling, general and administrative expenses increased to $45.2 million from $37.2 million a year ago, a notable increase relative to revenue growth. The increase was driven by higher long-term incentive compensation expense tied to the stock price and $3.7 million acceleration of expense recognition under an executive retention agreement that is not expected to recur during the remaining quarters of 2026.
AROC also recorded a long-lived and other asset impairment charge of $5.3 million during the quarter, up from $1 million recorded in the year-ago period.
Archrock Benefits From Asset Sales & Strong Cash Metrics
Archrock’s quarter included a meaningful contribution from asset sales. Adjusted EBITDA totaled $221.0 million, up from $197.8 million in the first quarter of 2025, and included $10.1 million in net gains primarily related to the sale of compression and other assets, higher than the year-ago figure of $7.3 million.
Cash generation remained a key support point. Net cash provided by operating activities was $185.9 million, and adjusted free cash flow was $91.9 million. The company returned $44.3 million to shareholders through dividends and share repurchases during the quarter, including a 22-cent per share dividend and approximately $4.4 million of buybacks.
AROC’s Capital Expenditure
Net capital expenditures of AROC totaled $92.2 million in the first quarter of 2026.
Archrock Maintains Leverage Discipline
AROC continued to reshape its balance sheet following recent financing actions. Long-term debt was $2.4 billion at March 31, 2026, and the company reported a leverage ratio of 2.6X, down from 3.2X a year earlier. The total available liquidity was $1.4 billion as of the same date.
AROC Reaffirms 2026 Outlook
Archrock reaffirmed full-year 2026 adjusted EBITDA guidance of $865 million to $915 million. Management emphasized that underlying business performance exceeded its basis for guidance, but higher SG&A was a partial offset in the quarter. On the investment side, the company expects growth capital expenditures between $250 million and $275 million to support newbuild horsepower and repackaging activity.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Archrock Inc. has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Interestingly, Archrock Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Archrock Inc. is part of the Zacks Oil and Gas - Field Services industry. Over the past month, Oceaneering International (OII - Free Report) , a stock from the same industry, has gained 2.5%. The company reported its results for the quarter ended March 2026 more than a month ago.
Oceaneering International reported revenues of $692.43 million in the last reported quarter, representing a year-over-year change of +2.7%. EPS of $0.30 for the same period compares with $0.43 a year ago.
Oceaneering International is expected to post earnings of $0.48 per share for the current quarter, representing a year-over-year change of -2%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Oceaneering International. Also, the stock has a VGM Score of B.
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Why Is Archrock Inc. (AROC) Down 12.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Archrock Inc. (AROC - Free Report) . Shares have lost about 12.5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Archrock Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
Archrock Q1 Earnings & Revenues Miss Estimates
Archrock reported first-quarter 2026 adjusted earnings of 42 cents per share, which missed the Zacks Consensus Estimate of 47 cents by 10.6%. The bottom line remained flat year over year.
The Houston, TX-based oil and gas equipment and services company generated total quarterly revenues of $373.8 million, up 7.7% year over year from $347.2 million reported in the year-ago quarter, reflecting higher contract operations activity and increased pricing. The figure missed the Zacks Consensus Estimate of $376.7 million by 0.8%.
The lower-than-expected quarterly results were driven by higher selling, general and administrative (SG&A) costs and a non-cash impairment charge.
AROC’s Contract Operations Continued to Drive Growth
Contract operations remained the primary growth engine. Segment revenues increased 10% year over year to $330.9 million from $300.4 in the year-ago quarter, supported by higher operating horsepower and pricing. Average operating horsepower at the quarter-end was 4.5 million compared with 4.3 million a year ago, while utilization is at 95% compared with the year-ago period’s figure of 96%, underscoring the durability of demand for its compression services.
Profitability in the segment also improved on a year-ago basis. Contract operations adjusted gross margin increased 13% to $237.6 million from $210.6 million recorded in the prior-year period. Contract operations adjusted gross margin percentage expanded to 72% from 70% in the year-ago period, reflecting operating execution and pricing carryover.
Archrock’s Aftermarket Services Softened on Seasonality
Aftermarket services were weaker year over year. Segment revenues were $42.9 million, down from $46.8 million recorded in the first quarter of 2025, reflecting lower service activity and a seasonal slowdown.
Margins compressed modestly as well. Aftermarket services adjusted gross margin was $9.8 million compared with $11.5 million a year ago. The aftermarket services adjusted gross margin percentage declined to 23% from 25% in the year-ago quarter.
AROC’s Cost Structure Shifts Higher in the Quarter
The earnings miss reflected pressure from operating costs that came in above the level implied by consensus expectations. Selling, general and administrative expenses increased to $45.2 million from $37.2 million a year ago, a notable increase relative to revenue growth. The increase was driven by higher long-term incentive compensation expense tied to the stock price and $3.7 million acceleration of expense recognition under an executive retention agreement that is not expected to recur during the remaining quarters of 2026.
AROC also recorded a long-lived and other asset impairment charge of $5.3 million during the quarter, up from $1 million recorded in the year-ago period.
Archrock Benefits From Asset Sales & Strong Cash Metrics
Archrock’s quarter included a meaningful contribution from asset sales. Adjusted EBITDA totaled $221.0 million, up from $197.8 million in the first quarter of 2025, and included $10.1 million in net gains primarily related to the sale of compression and other assets, higher than the year-ago figure of $7.3 million.
Cash generation remained a key support point. Net cash provided by operating activities was $185.9 million, and adjusted free cash flow was $91.9 million. The company returned $44.3 million to shareholders through dividends and share repurchases during the quarter, including a 22-cent per share dividend and approximately $4.4 million of buybacks.
AROC’s Capital Expenditure
Net capital expenditures of AROC totaled $92.2 million in the first quarter of 2026.
Archrock Maintains Leverage Discipline
AROC continued to reshape its balance sheet following recent financing actions. Long-term debt was $2.4 billion at March 31, 2026, and the company reported a leverage ratio of 2.6X, down from 3.2X a year earlier. The total available liquidity was $1.4 billion as of the same date.
AROC Reaffirms 2026 Outlook
Archrock reaffirmed full-year 2026 adjusted EBITDA guidance of $865 million to $915 million. Management emphasized that underlying business performance exceeded its basis for guidance, but higher SG&A was a partial offset in the quarter. On the investment side, the company expects growth capital expenditures between $250 million and $275 million to support newbuild horsepower and repackaging activity.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Archrock Inc. has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Interestingly, Archrock Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Archrock Inc. is part of the Zacks Oil and Gas - Field Services industry. Over the past month, Oceaneering International (OII - Free Report) , a stock from the same industry, has gained 2.5%. The company reported its results for the quarter ended March 2026 more than a month ago.
Oceaneering International reported revenues of $692.43 million in the last reported quarter, representing a year-over-year change of +2.7%. EPS of $0.30 for the same period compares with $0.43 a year ago.
Oceaneering International is expected to post earnings of $0.48 per share for the current quarter, representing a year-over-year change of -2%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Oceaneering International. Also, the stock has a VGM Score of B.