Stock News in Focus: Archrock (NYSE: AROC)

Archrock (NYSE: AROC) spotted trading -30.33% off 52-week high price. On the other end, the stock has been noted 31.96% away from the low price over the last 52-weeks. The stock changed -1.74% to recent value of $9.58. The stock transacted 723466 shares during most recent day however it has an average volume of 769.54K shares. The company has 130.06M of outstanding shares and 127.74M shares were floated in the market.

On June 24, 2019, Archrock (NYSE: AROC) announced that it has entered into a definitive agreement to acquire substantially all assets of Elite Compression Services, LLC (Elite), a portfolio company of JDH Capital Company, including approximately 430,000 of predominately large-horsepower compression assets for total consideration of $410 million. The transaction will be funded with approximately $205 million of cash and approximately 21.7 million newly issued Archrock common shares to the seller.  In conjunction with the transaction, Harvest Midstream Company (Harvest Midstream) will acquire approximately 80,000 active and idle compression horsepower from Archrock for $30 million in cash. Archrock’s Board of Directors has appointed energy industry veteran Jeffery D. Hildebrand, Executive Chairman and Founder, of Hilcorp Energy Company, which is affiliated with JDH Capital and Harvest Midstream, to Archrock’s Board of Directors upon closing of the transactions.

We are excited to announce the acquisition of Elite’s excellent contract compression operations in a transaction that will immediately benefit Archrock shareholders through accretive earnings and cash flow growth, said Brad Childers, President and Chief Executive Officer of Archrock. The assets being acquired from Elite are highly utilized, predominantly large-horsepower compression units, more than 80% of which are contracted for more than three years with blue-chip customers. We expect the acquired assets to generate approximately $55 million of annualized adjusted EBITDA, inclusive of $5 million in annualized cost synergies. In addition, this transaction adds basin density in our core areas, with more than 70% of the units deployed in the Eagle Ford and South Texas region, and the concurrent sale of non-core equipment further standardizes our asset portfolio. We believe these transactions support our ability to achieve our stated financial targets, including reducing our leverage to below 4.0x in 2020, growing our dividend between 10% and 15% annually through 2020, and maintaining dividend coverage of more than 2.0x through 2020.

Archrock and Elite have been fantastic service providers of ours for many years, and we are pleased to be partnering with a company that is aligned with our strategy of natural gas production growth and best in class midstream operations.  They have sufficient scale, experience and capabilities to grow with us over time, said Jeff Hildebrand. Further, I am very proud of the extraordinary effort and leadership Jerry Blackmon and the management team at Elite have exhibited since the company was formed.  I am also excited to serve on the Archrock board, and look forward to working with the company to further advance Archrock’s strategy as both a board member and substantial owner. Its earnings per share (EPS) expected to touch remained 136.80% for this year while earning per share for the next 5-years is expected to reach at -12.91%. AROC has a gross margin of 48.70% and an operating margin of 15.60% while its profit margin remained 4.70% for the last 12 months.

According to the most recent quarter its current ratio was 1.4 that represents company’s ability to meet its current financial obligations. The price moved ahead of 2.94% from the mean of 20 days, -1.87% from mean of 50 days SMA and performed -4.64% from mean of 200 days price. Company’s performance for the week was 4.02%, 5.62% for month and YTD performance remained 27.90%.

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