It has been about a month since the last earnings report for USA Compression Partners (USAC Quick QuoteUSAC - Free Report) . Shares have added about 20.8% 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 the most recent earnings report in order to get a better handle on the important drivers.

USA Compression Partners Q4 Earnings Miss Estimates

USA Compression Partners reported fourth-quarter 2023 adjusted net profit of 10 cents per common unit, which lagged the Zacks Consensus Estimate of 12 cents due to higher total costs and other expenses. However, the metric improved significantly from the year-ago quarter's adjusted net loss of 4 cents per share. This was backed by a net income worth $12.8 million compared with $8.4 million a year ago.

Revenues of $225 million were up 18.4% from the year-ago quarter’s level and beat the Zacks Consensus Estimate of $222 million.

Adjusted EBITDA increased 22.7% to $138.6 million and came ahead of our estimate of $131.7 million. Distributable cash flow increased from $60.6 million in the prior-year quarter to $79.9 million.

USAC reported operating cash flow of $91.6 million in the fourth quarter, up from the prior-year quarter’s $82.1 million. Gross operating margin of 67.5% marked an increase from the year-ago period’s 65.3%.

The company’s revenue-generating capacity increased 7.6% to 3.41 million horsepower year over year. However, the figure was lower than our estimate of 3.44 million horsepower. Further, the average monthly revenue per horsepower rose to $19.52 from $17.81 in the fourth quarter of 2022.

Meanwhile, USA Compression’s average quarterly horsepower utilization rate came in at 94.1%, up from 91.3% a year ago.

DCF, Cost, Capex & Balance Sheet

USAC’s distributable cash flow available to limited partners totaled $79.9 million (providing 1.48x distribution coverage), up 31.8% from the year-ago level.

Notably, on Jan 11, it announced fourth-quarter cash distribution of 52.50 cents per unit ($2.10 on an annualized basis). The distribution was paid on Feb 2, 2024, to common unitholders of record as of Jan 23, 2024.

It reported $156.5 million in costs and expenses, up 9.1% from the year-ago quarter’s $143.4 million.

It spent $90.1 million on growth capex. Maintenance capex amounted to $6.6 million.

As of Dec 31, 2023, USA Compression had a net long-term debt of $2.3 billion.

Guidance

For 2024, USAC anticipates distributable cash flow in the $310-$330 million range. Management expects adjusted EBITDA in the band of $555-$575 million.

The company also anticipates 2024 net income in the $95-$115 million range.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -10.15% due to these changes.

VGM Scores

Currently, USA Compression has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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. Notably, USA Compression has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.