AROC

Archrock ($AROC) Director Buys 25,000 Shares Over 3 Days...Undervaluation Opportunity Emerges

09/23/2025 16:23

Notable insider trading activity has emerged at natural gas compression services company Archrock ($AROC), where Director Jason Rebrook made consecutive purchases totaling 25,000 shares worth approximately $600,000 over three days from September 18-22. Archrock is a leading energy infrastructure company based in Houston that provides natural gas compression services across the United States. Founded in 1990, the company delivers engineered natural gas compression solutions and aftermarket services to integrated and independent oil and natural gas processors, gatherers, and transporters. The business operates through two segments—Contract Operations and Aftermarket Services—with a balanced 50/50 customer base split between upstream producers and midstream companies. Rebrook's consecutive buying spree carries significant implications. He purchased 10,000 shares at $24.17 per share in the first transaction, followed by another 10,000 shares at $24.16, and finally 5,000 shares at $23.94. Each transaction was executed through multiple trades with prices ranging from $23.91-$24.20, suggesting this was a carefully planned accumulation strategy rather than impulsive buying. This aggressive purchasing stands in stark contrast to other executive trading patterns this year. In March, CAO Henderson sold 8,318 shares, while SVP Jason Ingersoll disposed of 42,036 shares worth approximately $1.03 million in May. August saw SVP Eric Thode sell 10,000 shares, continuing the executive selling trend. Against this backdrop of management selling, a director's substantial buying signals strong conviction about the company's intrinsic value. The current stock price of $23.84 presents an intriguing positioning. After reaching a 2025 high of $29.63 in January, the stock experienced correction but bounced from the April low of $20.65. While trading about 20% below year-to-date highs, current levels may offer an attractive entry point given the company's fundamentals. Archrock's financial performance has been impressive. Q1 2025 revenue surged 41.6% year-over-year to $347.16 million, while adjusted earnings per share of $0.42 beat consensus estimates of $0.38. The company raised its 2025 adjusted EBITDA guidance to $790-830 million from the previous $750-790 million range. High fleet utilization at 96% and stable revenue backed by multi-year contracts drive this growth trajectory. Particularly noteworthy is the company's strategic positioning. Recent acquisitions of TOPS ($983 million) and NGCS expanded compression capacity by 30%, while allocating 30% of new investments to electric compression equipment positions the company for environmental transition trends. Structural demand growth for natural gas infrastructure, combined with accelerating outsourcing trends in compression services, provides solid long-term growth drivers. Investors should monitor specific indicators for positive signals: quarterly fleet utilization maintaining above 95%, contract backlog continuing to grow, and debt/EBITDA ratio improving below 3.2x. Warning signs include utilization dropping below 90%, new contract signings slowing, or leverage ratios exceeding 3.5x. Analysts currently target $31 per share, representing approximately 30% upside potential from current levels. The forward P/E of 13.99x appears undervalued versus the industry average of 18x, while the 3.43% dividend yield adds appeal. Scenario analysis suggests an optimistic case could see $35 if natural gas production growth and compression service outsourcing accelerate. The base case maintains current growth trajectory toward the $31 target, while a cautionary scenario could see correction toward $20 if energy prices collapse or regulatory changes emerge. Rebrook's consecutive buying transcends personal investment decisions, reflecting insider judgment that the market undervalues the company. Considering the structural growth in energy infrastructure, solid operational performance, and current valuation metrics, Archrock presents an intriguing opportunity for long-term investors.