Strong order pipeline and favorable natural gas trends drive Archrock's expansion

Archrock Inc.: A Key Player in Natural Gas Compression

Archrock Inc. (AROC) stands out as a major provider of natural gas compression services, supporting the production, processing, and transportation of natural gas. The company’s revenue stream is underpinned by long-term, fee-based agreements with its customers, ensuring consistent income. Archrock’s performance is closely tied to ongoing natural gas production in the United States, which fuels the need for its compression solutions.

Growth Drivers and Business Outlook

AROC has noted that U.S. natural gas output is on track to set new records for the sixth year in a row. The expansion of liquefied natural gas (LNG) export facilities and the surge in electricity demand—especially from AI-powered data centers—are expected to further boost natural gas consumption. These trends are anticipated to sustain demand for Archrock’s compression assets and support earnings growth. According to the company’s latest earnings update, Archrock has already secured contracts for 85% of its available horsepower through 2026 and has begun scheduling deliveries for 2027. This robust backlog provides strong revenue visibility and underscores ongoing customer interest.

With natural gas playing an increasingly vital role in the global energy landscape, Archrock is focusing its investments on expanding its infrastructure and upgrading compression equipment. These efforts aim to help clients move gas more efficiently while minimizing environmental impact. The company is allocating capital toward high-horsepower and electric motor-driven compression units, which are expected to see strong demand and deliver attractive returns. Through these strategic initiatives, Archrock is positioning itself to benefit from the sustained growth in natural gas usage and deliver long-term value to its shareholders.

Other Energy Companies Poised to Gain from Natural Gas Trends

The rising number of data centers and increased reliance on gas-fired power generation create new opportunities for Enbridge Inc. (ENB). Data centers are major electricity consumers, driving up natural gas demand as utilities shift from coal to gas. Enbridge is well-placed to benefit from expanding its natural gas storage capabilities and currently holds a Zacks Rank #2 (Buy).

Baker Hughes (BKR) is also set to capitalize on the growing energy needs of data centers. The company is investing in its capabilities to meet this demand, having secured nearly $1 billion in data center-related orders for 2025, and is targeting $3 billion over the next three years. The uptick in electricity consumption is expected to drive further investment in energy infrastructure, which should boost demand for Baker Hughes’ Industrial & Energy Technology (IET) offerings. BKR currently holds a Zacks Rank #3 (Hold).

AROC: Stock Performance, Valuation, and Analyst Estimates

Over the past year, AROC shares have climbed 38.2%, while the broader oil and gas production and pipeline sector has advanced by 51%.

Image Source: Zacks Investment Research

From a valuation perspective, AROC is trading at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) ratio of 10.37, which is slightly higher than the industry average of 10.06.

Image Source: Zacks Investment Research

Analyst consensus for AROC’s 2026 earnings has been revised upward over the past month, reflecting growing optimism about the company’s outlook.

Image Source: Zacks Investment Research

Currently, AROC holds a Zacks Rank #1 (Strong Buy).

Quantum Computing: The Next Big Investment Opportunity

Quantum computing is emerging as a transformative technology, potentially surpassing even artificial intelligence in its impact. While many thought widespread adoption was years away, major tech companies like Microsoft, Google, Amazon, Oracle, Meta, and Tesla are already racing to integrate quantum computing into their operations.

Senior Stock Strategist Kevin Cook has identified seven stocks that are well-positioned to lead in the quantum computing space, detailed in his report, Beyond AI: The Quantum Leap in Computing Power.

Kevin Cook, who was among the first to recognize NVIDIA’s potential in 2016, now highlights quantum computing as the next major investment frontier. Investors have a unique opportunity to get ahead of this trend.

Additional Resources and Reports

For the latest stock recommendations from Zacks Investment Research, you can download the 7 Best Stocks for the Next 30 Days.