Archrock (NYSE:AROC) Shares Gap Down After Earnings Miss

Key Points

• Archrock shares fell sharply after the company reported quarterly EPS of $0.38, below the $0.45 consensus estimate, while revenue of $371.24 million also missed expectations and declined 3.1% year over year.
• The company raised its quarterly dividend to $0.23 per share, equivalent to an annualized $0.92 payout and a 2.7% yield.
• Despite the earnings miss, analysts remain positive, with a consensus “Buy” rating and an average price target of $41.71, while insiders have sold 158,000 shares worth approximately $5.9 million over the past 90 days.

Shares of Archrock, Inc. (NYSE:AROC - Get Free Report) gapped down before the market opened on Wednesday following a weaker than expected earnings announcement. The stock had previously closed at $35.74, but opened at $33.50. Archrock shares last traded at $34.10, with a volume of 426,757 shares trading hands.

The energy company reported $0.38 EPS for the quarter, missing the consensus estimate of $0.45 by ($0.07). Archrock had a net margin of 21.45% and a return on equity of 22.89%. The business had revenue of $371.24 million during the quarter, compared to analysts' expectations of $393.19 million. During the same period in the prior year, the business earned $0.39 EPS. The business's quarterly revenue was down 3.1% on a year-over-year basis.

Archrock Increases Dividend

The business also recently disclosed a quarterly dividend, which will be paid on Tuesday, August 11th. Stockholders of record on Tuesday, August 4th will be paid a $0.23 dividend. This represents a $0.92 annualized dividend and a dividend yield of 2.7%. The ex-dividend date is Tuesday, August 4th. This is a boost from Archrock's previous quarterly dividend of $0.22. Archrock's dividend payout ratio (DPR) is 47.83%.

Analyst Ratings Changes

A number of research firms recently weighed in on AROC. Mizuho upped their target price on shares of Archrock from $38.00 to $40.00 and gave the stock an "outperform" rating in a research note on Wednesday, June 3rd. Wells Fargo & Company lifted their price target on shares of Archrock from $40.00 to $43.00 and gave the stock an "overweight" rating in a research note on Thursday, May 7th. Citigroup boosted their price target on shares of Archrock from $40.00 to $43.00 and gave the stock a "buy" rating in a report on Wednesday, May 13th. Weiss Ratings upgraded shares of Archrock from a "buy (b+)" rating to a "buy (a-)" rating in a report on Tuesday, July 28th. Finally, Royal Bank Of Canada lifted their price objective on shares of Archrock from $41.00 to $44.00 and gave the stock an "outperform" rating in a research report on Tuesday, July 21st. One investment analyst has rated the stock with a Strong Buy rating, eight have given a Buy rating and one has given a Hold rating to the company's stock. According to MarketBeat, the company currently has a consensus rating of "Buy" and an average target price of $41.71.

Insider Activity at Archrock

In related news, SVP Jason Ingersoll sold 33,000 shares of the company's stock in a transaction that occurred on Monday, May 18th. The stock was sold at an average price of $38.19, for a total value of $1,260,270.00. Following the completion of the transaction, the senior vice president directly owned 277,454 shares of the company's stock, valued at $10,595,968.26. This represents a 10.63% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available through this hyperlink. Also, CFO Doug S. Aron sold 35,000 shares of the stock in a transaction that occurred on Monday, May 18th. The shares were sold at an average price of $38.30, for a total transaction of $1,340,500.00. Following the completion of the transaction, the chief financial officer owned 359,337 shares in the company, valued at $13,762,607.10. This represents a 8.88% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. In the last 90 days, insiders have sold 158,000 shares of company stock valued at $5,907,370. 2.90% of the stock is owned by company insiders.

Institutional Inflows and Outflows

Hedge funds have recently modified their holdings of the stock. Royal Bank of Canada lifted its position in Archrock by 0.7% in the first quarter. Royal Bank of Canada now owns 95,866 shares of the energy company's stock valued at $2,514,000 after acquiring an additional 667 shares during the last quarter. Jones Financial Companies Lllp boosted its stake in Archrock by 217.9% in the first quarter. Jones Financial Companies Lllp now owns 1,316 shares of the energy company's stock valued at $35,000 after acquiring an additional 902 shares in the last quarter. EverSource Wealth Advisors LLC grew its holdings in shares of Archrock by 482.9% during the second quarter. EverSource Wealth Advisors LLC now owns 2,699 shares of the energy company's stock worth $67,000 after purchasing an additional 2,236 shares during the last quarter. First Trust Advisors LP grew its holdings in shares of Archrock by 24.6% during the second quarter. First Trust Advisors LP now owns 279,100 shares of the energy company's stock worth $6,930,000 after purchasing an additional 55,059 shares during the last quarter. Finally, Daiwa Securities Group Inc. increased its position in shares of Archrock by 19.8% during the second quarter. Daiwa Securities Group Inc. now owns 9,700 shares of the energy company's stock worth $241,000 after purchasing an additional 1,600 shares in the last quarter. 95.45% of the stock is owned by hedge funds and other institutional investors.

Archrock Price Performance

The company has a debt-to-equity ratio of 1.57, a current ratio of 1.41 and a quick ratio of 0.91. The firm has a market cap of $5.96 billion, a price-to-earnings ratio of 18.48, a PEG ratio of 1.54 and a beta of 0.86. The stock has a 50-day moving average price of $36.84 and a 200 day moving average price of $35.31.

About Archrock

Archrock, Inc is a Houston‐based provider of natural gas compression services and equipment to the oil and gas industry in North America. Founded in 2004, the company supplies both short‐term rentals and long‐term contracts for compression solutions, serving upstream and midstream producers. Archrock's offerings include engineered compression systems, aftermarket parts, maintenance and field services designed to optimize wellhead and pipeline operations.

The company's core business activities focus on the design, manufacture, rental and sale of gas compression equipment.

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