USA Compression (USAC) AI Stock Analysis

• Market Cap: $2.84B
• Dividend Yield: 8.7%
• Average Volume (3M): 359.28K
• Price to Earnings (P/E): 33.7
• Beta (1Y): 0.71
• Revenue Growth: 12.32%
• EPS Growth: 247.77%
• Country: US
• Employees: 854
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Equipment & Services
• EPS (TTM): 0.72
• Shares Outstanding: 117,528,970
• 10 Day Avg. Volume: 246,165
• 30 Day Avg. Volume: 359,278
• PEG Ratio: 0.14
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.35
• Price to Cash Flow (P/CF): 6.10
• P/FCF Ratio: 7.90
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $27.00
• Price Target Upside: 17.70% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 6

USA Compression shows strong financial performance with robust cash flow and revenue growth, despite high leverage on the balance sheet. Technical indicators suggest a bullish trend with positive momentum. The high P/E ratio indicates potential overvaluation, but the attractive dividend yield provides a counterbalance. The earnings call supports a positive outlook, projecting strong future growth. These factors collectively suggest a solid investment potential, though with some risks due to leverage and valuation.

Positive Factors

Financial and operational records

USAC stands poised to benefit from macro tailwinds that should continue to drive financial and operational records.

Operational strength

The strength of USAC's operational outlook is driven by strong utilization and tariff growth trajectory, leading to raised estimates.

Order book and new units

It's encouraging USAC expects to order new units to be placed in-service and is already working on building a ~2026 order book.

Negative Factors

Deleveraging constraints

Still wood to chop on deleveraging, which remains a constraint on 2024/2025 outlook.

EBITDA outlook

The partnership's initial FY25 adj EBITDA outlook was underwhelming, especially since annualizing USAC's 4Q24 result after a one-time $3mn tax credit would still imply FY25 EBITDA above the high-end of USAC's guidance range.

Growth messaging clarity

USAC's messaging around growth has been less clear and at times contradictory, which is highlighted by the partnership's marked underperformance against AROC/KGS over the past year.

USA Compression Business Overview & Revenue Model

Company Description

USA Compression Partners, LP, a growth-oriented Delaware limited partnership that provides natural gas compression services in terms of total compression fleet horsepower. The company offers compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil, as well as operates stations. It primarily focuses on providing natural gas compression services to infrastructure applications, including centralized natural gas gathering systems and processing facilities. The company was founded in 1998 and is headquartered in Austin, Texas.

How the Company Makes Money

USA Compression makes money through leasing natural gas compression equipment and providing related services to its customers, which are primarily oil and gas companies. The company enters into long-term contracts with its clients, where it charges fees based on the horsepower of the equipment leased and the duration of the service agreement. Revenue is also generated from maintenance and operational support services that are often bundled with equipment leases. Key factors contributing to its earnings include the strategic placement of its equipment in high-demand shale regions, the reliability and efficiency of its compression systems, and its ability to maintain strong customer relationships through consistent service. Significant partnerships with major energy producers can enhance its revenue streams by securing long-term contracts and expanding service offerings.

USA Compression Financial Statement Overview

Summary

USA Compression exhibits strong revenue growth and improved net profitability, highlighting a positive trajectory in its income statement. However, the balance sheet reveals high leverage with minimal equity, posing financial stability risks. Despite these concerns, the company's cash flow is robust, with significant operating and free cash flow, indicating strong cash management and operational efficiency. Overall, the financial health is mixed, with strengths in cash flow and income growth offset by balance sheet leverage concerns.

Income Statement

The company has demonstrated strong revenue growth, with an increase from $846 million in 2023 to $950 million in 2024. The gross profit margin is notably high at 100% due to total revenue equaling gross profit, indicating no cost of goods sold. Net profit margin improved to 8.63% in 2024, showcasing enhanced profitability. However, the EBITDA margin dropped significantly from 57.39% in 2023 to 16.37% in 2024, indicating rising operating expenses. Overall, strong revenue growth and improved net profitability contribute to a solid income statement performance.

Balance Sheet

The company's balance sheet shows a concerning debt-to-equity ratio of 0.42 in 2024, compared to 12.84 in 2023, due to a significant decrease in stockholders' equity. The equity ratio is weak at 1.01% in 2024, indicating high leverage with most assets financed by debt. Although liabilities decreased, the minimal equity base raises concerns about financial stability. This high leverage poses a potential risk to financial health and flexibility.

Cash Flow

Operating cash flow increased to $341 million in 2024 from $271 million in 2023, reflecting robust cash generation. The free cash flow growth rate is impressive, and the operating cash flow to net income ratio of 4.16 in 2024 indicates strong cash-generating capabilities relative to net income. The company's ability to generate free cash flow and manage capital expenditures effectively supports a strong cash flow position.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
950.45M	846.18M	704.60M	632.64M	667.68M
	Gross Profit
372.97M	315.37M	233.59M	199.49M	222.78M
	EBIT
294.45M	231.98M	-64.28M	-95.26M	-76.09M
	EBITDA
560.03M	485.65M	406.06M	379.85M	-225.40M
	Net Income Common Stockholders
82.03M	68.27M	30.32M	10.28M	-594.73M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
14.00K	11.00K	35.00K	-18.55M	2.00K
	Total Assets
2.75B	2.74B	2.67B	2.77B	2.95B
	Total Debt
11.68M	2.35B	2.12B	1.99B	1.95B
	Net Debt
11.66M	2.35B	2.12B	2.01B	1.95B
	Total Liabilities
2.72B	2.55B	2.78B	2.77B	2.13B
	Stockholders Equity
27.76M	183.05M	-116.30M	578.42M	814.96M
Cash Flow		Free Cash Flow
341.33M	33.36M	126.37M	220.21M	184.13M
	Operating Cash Flow
341.33M	271.88M	260.59M	265.43M	293.20M
	Investing Cash Flow
-202.01M	-232.65M	-129.94M	-39.19M	-105.10M
	Financing Cash Flow
-139.32M	-39.26M	-130.61M	-226.24M	-188.11M

USA Compression Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 22.94
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For USAC, the sentiment is Negative. The current price of 22.94 is below the 20-day moving average (MA) of 26.13, below the 50-day MA of 26.77, and below the 200-day MA of 23.40, indicating a bearish trend. The MACD of 0.18 indicates Negative momentum. The RSI at 54.24 is Neutral, neither overbought nor oversold. The STOCH value of 36.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for USAC.

USA Compression Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NGS	79 Outperform	$238.00M	13.82	7.02%	―	29.36%	261.48%
AROC	78 Outperform	$4.12B	22.40	15.49%	2.96%	16.89%	55.94%
USAC	70 Outperform	$2.84B	33.68	94.47%	8.70%	12.32%	247.77%
WTTR	70 Outperform	$1.02B	28.25	3.91%	3.06%	-8.41%	-58.49%
KGS	67 Neutral	$2.95B	59.46	3.84%	4.79%	36.33%	83.52%
LBRT	63 Neutral	$1.89B	6.25	16.54%	2.57%	-9.11%	-40.79%
Sector *	57 Neutral	$7.72B	4.32	-3.75%	6.33%	-0.11%	-64.75%

USA Compression Corporate Events

USA Compression Appoints Julie McEwen as VP and Controller

On February 27, 2025, USA Compression GP, LLC, the general partner of USA Compression Partners, LP, announced the appointment of Julie A. McEwen as Vice President and Controller, effective March 4, 2025. Ms. McEwen, who has been with the Partnership since 2011, previously served as Controller and Director of SEC Reporting. Her appointment reflects a continuation of her leadership within the company, with no changes to her compensation or any familial or business arrangements influencing her selection.

USA Compression Engages Investors at J.P. Morgan Conference

USA Compression Partners, LP announced its participation in the J.P. Morgan Global Leveraged Finance Conference on February 24 and 25. During this event, senior management planned to engage with the investment community, with presentation materials made available on the company’s website. This move signifies the company’s efforts to engage with investors and potentially strengthen its market position.