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Archrock (AROC) Gears Up for Q2 Earnings: What to Expect
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Archrock, Inc. (AROC - Free Report) is set to release second-quarter 2024 results on Jul 31. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 24 cents per share on revenues of $270.6 million.
Let’s delve into the factors that might have influenced the Houston, TX-based energy company’s results in the June quarter. But it’s worth taking a look at AROC’s previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, the provider of natural gas-compression services beat the consensus mark due to pricing and profitability gains across all segments. AROC had reported earnings per share of 26 cents, ahead of the Zacks Consensus Estimate of 22 cents. Revenues of $268.5 million generated by the firm also outperformed the Zacks Consensus Estimate by 3.1%.
AROC beat the Zacks Consensus Estimate in three of the last four quarters and met in the other, which resulted in an average earnings surprise of 13%. This is depicted in the graph below:
The Zacks Consensus Estimate for the second-quarter bottom line has been revised 7.7% downward in the past seven days. The estimated figure indicates a 33.3% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 9.3% increase from the year-ago period.
Factors to Consider
The increase in Archrock’s costs might have dented its to-be-reported bottom line. AROC’s selling, general and administrative costs in the first quarter increased around 20% year over year to $31.7 million. The upward cost trajectory is likely to have continued in the second quarter due to the higher cost of equipment.
Another significant bearish consideration for Archrock is the decline in the size of its compression fleet and overall horsepower. Despite impressive revenue growth, the company reported a reduction from 4,319 units in 2021 to 3,348 units in 2023, with horsepower dropping from 3.88 million to 3.76 million over the same period. This contraction in asset base might have continued in the second quarter, limiting future earnings growth potential and impact long-term profitability.
Finally, supply chain risks continue to plague the compression market, with engine delivery times extending to over 40-45 weeks. This is a critical issue as it delays final assembly and delivery, potentially stalling AROC's ability to deploy new equipment and meet customer demand. AROC's projected growth rates and ability to capture market share might have been significantly compromised in the quarter under review, leading to underperformance.
But in some respite to the company, Archrock is expected to have reaped the reward of higher contract operations revenue generation during the second quarter. AROC continues to benefit from robust demand for natural gas compressors, which help the commodity to move from the wellhead (where it is produced) to the end market (where it is demanded).
In other words, compression equipment is an integral part of natural gas pipelines, helping to push the fuel from one place to another. In the first quarter of 2024, the company’s contract operations revenues increased nearly 19% to $223.1 million. The uptick is expected to have continued in the to-be-reported quarter on the back of high utilization and pricing.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Archrock is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -8.33%.
Zacks Rank: AROC currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
While an earnings beat looks uncertain for Archrock, here are some firms from the energy space that you may want to consider on the basis of our model:
TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +1.16% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 1.
Over the past 90 days, the Zacks Consensus Estimate for TC Energy’s 2024 earnings has moved up 4.5%. Valued at around $42 billion, TRP has gained 22.8% in a year.
Camadian Natural Resources Limited (CNQ - Free Report) has an Earnings ESP of +9.84% and a Zacks Rank #3. The firm is scheduled to release earnings on Aug 1.
Canadian Natural Resources has a trailing four-quarter earnings surprise of 5.5%, on average. Valued at around $73.2 billion, CNQ has gained 13.9% in a year.
MPLX LP (MPLX - Free Report) has an Earnings ESP of +0.82% and a Zacks Rank #3. The firm is scheduled to release earnings on Aug 6.
MPLX’s expected EPS growth rate for three to five years is currently 5%, which compares favorably with the industry's growth rate of 4.5%. Valued at around $43.8 billion, MPLX has gained 21.6% in a year.
Image: Bigstock
Archrock (AROC) Gears Up for Q2 Earnings: What to Expect
Archrock, Inc. (AROC - Free Report) is set to release second-quarter 2024 results on Jul 31. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 24 cents per share on revenues of $270.6 million.
Let’s delve into the factors that might have influenced the Houston, TX-based energy company’s results in the June quarter. But it’s worth taking a look at AROC’s previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, the provider of natural gas-compression services beat the consensus mark due to pricing and profitability gains across all segments. AROC had reported earnings per share of 26 cents, ahead of the Zacks Consensus Estimate of 22 cents. Revenues of $268.5 million generated by the firm also outperformed the Zacks Consensus Estimate by 3.1%.
AROC beat the Zacks Consensus Estimate in three of the last four quarters and met in the other, which resulted in an average earnings surprise of 13%. This is depicted in the graph below:
Archrock, Inc. Price and EPS Surprise
Archrock, Inc. price-eps-surprise | Archrock, Inc. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the second-quarter bottom line has been revised 7.7% downward in the past seven days. The estimated figure indicates a 33.3% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 9.3% increase from the year-ago period.
Factors to Consider
The increase in Archrock’s costs might have dented its to-be-reported bottom line. AROC’s selling, general and administrative costs in the first quarter increased around 20% year over year to $31.7 million. The upward cost trajectory is likely to have continued in the second quarter due to the higher cost of equipment.
Another significant bearish consideration for Archrock is the decline in the size of its compression fleet and overall horsepower. Despite impressive revenue growth, the company reported a reduction from 4,319 units in 2021 to 3,348 units in 2023, with horsepower dropping from 3.88 million to 3.76 million over the same period. This contraction in asset base might have continued in the second quarter, limiting future earnings growth potential and impact long-term profitability.
Finally, supply chain risks continue to plague the compression market, with engine delivery times extending to over 40-45 weeks. This is a critical issue as it delays final assembly and delivery, potentially stalling AROC's ability to deploy new equipment and meet customer demand. AROC's projected growth rates and ability to capture market share might have been significantly compromised in the quarter under review, leading to underperformance.
But in some respite to the company, Archrock is expected to have reaped the reward of higher contract operations revenue generation during the second quarter. AROC continues to benefit from robust demand for natural gas compressors, which help the commodity to move from the wellhead (where it is produced) to the end market (where it is demanded).
In other words, compression equipment is an integral part of natural gas pipelines, helping to push the fuel from one place to another. In the first quarter of 2024, the company’s contract operations revenues increased nearly 19% to $223.1 million. The uptick is expected to have continued in the to-be-reported quarter on the back of high utilization and pricing.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Archrock is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -8.33%.
Zacks Rank: AROC currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
While an earnings beat looks uncertain for Archrock, here are some firms from the energy space that you may want to consider on the basis of our model:
TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +1.16% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 1.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 90 days, the Zacks Consensus Estimate for TC Energy’s 2024 earnings has moved up 4.5%. Valued at around $42 billion, TRP has gained 22.8% in a year.
Camadian Natural Resources Limited (CNQ - Free Report) has an Earnings ESP of +9.84% and a Zacks Rank #3. The firm is scheduled to release earnings on Aug 1.
Canadian Natural Resources has a trailing four-quarter earnings surprise of 5.5%, on average. Valued at around $73.2 billion, CNQ has gained 13.9% in a year.
MPLX LP (MPLX - Free Report) has an Earnings ESP of +0.82% and a Zacks Rank #3. The firm is scheduled to release earnings on Aug 6.
MPLX’s expected EPS growth rate for three to five years is currently 5%, which compares favorably with the industry's growth rate of 4.5%. Valued at around $43.8 billion, MPLX has gained 21.6% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.