Highlights

  • Archrock shows 40.12% basic EPS growth, a P/E of 15.65 and PEG of -1.76.
  • Second quarter net income was $66.7 million, or $0.38 per share, against $63.4 million.
  • Archrock redeemed its $800.0 million 2028 Notes on April 1 using Credit Facility borrowings.
  • The Board declared a quarterly dividend of $0.23 per share on July 23, 2026.

One-year earnings growth of 40.12%, paired with a trailing twelve-month P/E of 15.65 and an expected-basis PEG of -1.76, puts Archrock (NYSE:AROC) among undervalued growth stocks, with shares trading at USD 31.77 on October 28, 2026, up 0.35%. Alongside those figures, the natural gas compression services provider completed an $800.0 million offering of 6.0% senior notes due 2034 on January 21, redeemed its $800.0 million 2028 Notes on April 1, and reported second quarter 2026 net income of $66.7 million.

Archrock is based in Houston, Texas, and incorporated in Delaware. It describes itself as an energy infrastructure company with a primary focus on midstream natural gas compression, and as a provider of natural gas compression services, in terms of total compression fleet horsepower, to energy customers throughout the United States.Archrock operates two segments: contract operations, which owns and operates its compression fleet, and aftermarket services, which covers maintenance, overhaul and reconfiguration services and parts sales.

Growth: Second Quarter Net Income, Revenue and Segment Margins

Net income was $66.7 million in the second quarter of 2026 against $63.4 million a year earlier, and $140.5 million for the six months against $134.3 million. Basic and diluted earnings per share were $0.38 against $0.36 for the quarter, and $0.79 against $0.76 for the six months.

Total revenue was $371.2 million against $383.2 million, and $745.0 million for the six months against $730.3 million. Contract operations revenue was $329,260 thousand against $318,327 thousand, which the company attributed primarily to higher rates, an additional month of revenue from the NGCS Acquisition and horsepower additions. Contract operations adjusted gross margin, a non-GAAP measure, was $234,588 thousand against $222,175 thousand, at 71% against 70%. Aftermarket services revenue was $41,978 thousand against $64,825 thousand.

The company said the net income increase was primarily due to higher contract operations adjusted gross margin and lower impairment, transaction-related costs and interest expense, partly offset by higher depreciation and amortization, SG&A and income taxes. Average horsepower utilization was 94% against 96%.

Valuation: P/E of 15.65, PEG of -1.76 and Cash Generation

The P/E ratio of 15.65 is measured on trailing twelve-month earnings, and the PEG ratio of -1.76 on an expected basis. Total equity was $1,552,105 thousand at June 30, 2026, against $1,491,479 thousand at December 31, 2025. Net cash provided by operating activities was $346,635 thousand for the six months against $243,099 thousand.

On its second quarter call, management introduced a capital allocation framework for 2027 through 2030 that plans to return 25% to 35% of operating cash flow to shareholders through dividend growth and opportunistic share repurchases, alongside $1.4 billion to $1.6 billion of cumulative growth capital.

Capital and Balance Sheet: Notes, Credit Facility and Dividends

Long-term debt was $2,347,810 thousand at June 30, against $2,410,893 thousand at December 31. It included $800.0 million principal of 6.0% senior notes due February 2034, $700.0 million of 6.625% senior notes due September 2032 and $865.6 million of variable-rate Credit Facility borrowings at a weighted-average rate of 5.4%. The company stated it has no near-term maturities.

Growth capital expenditures were $115.9 million for the six months against $206.7 million, and maintenance capital expenditures were $73.5 million against $55.2 million.

The Board declared a quarterly dividend of $0.23 per share, or approximately $40.5 million, on July 23, payable August 11, 2026. Available capacity under the Share Repurchase Program, extended through December 31, 2026, was $113.2 million at June 30. Since April 2023 the company has repurchased 4,632,263 shares at an average price of $20.91 for $96.9 million.

Disclosed Risks and Outlook

Aftermarket services revenue fell 35% in the quarter, which the company attributed to lower parts sales and reduced customer demand for major maintenance, against a second quarter of 2025 that included non-recurring sales of overhauled engines. The effective tax rate was 26% against 24%. The company anticipates lube oil cost pressure in the second half of 2026, and a 1% change in the Credit Facility rate would change annual interest expense by $8.7 million.

On the call, management said some customers are deferring major maintenance while crude oil prices are high, and that it expects higher make-ready costs as idle units return to service. It narrowed full year 2026 adjusted EBITDA guidance to $865 million to $885 million from $865 million to $915 million, and reaffirmed growth capital expenditures of $250 million to $275 million. Total 2026 capital expenditures are planned at approximately $400 million to $445 million. During the quarter the company signed a contract covering approximately 665,000 horsepower with an 8-year base term and a 2-year extension option.