USA Compression Partners, LP (USAC) Stock Analysis
Is USAC a good investment?
USA Compression Partners, LP (USAC) has a Plutrex AI rating of 73.0/100 as of August 22, 2026, indicating a Buy consensus. The stock is not classified as halal-compliant. Key strength: PEG ratio of 0.65 vs. industry average 1.19 (45% discount) combined with P/E of 24.65x vs. industry 41.87x (41% discount) — USAC is the cheapest stock in its peer group on both earnings and growth-adjusted valuation, despite superior historical execution (earnings growth 40.9% vs. industry 12.96%); analyst consensus target of $30.17 implies 13.6% price upside plus ~6%+ distribution yield = 19%+ total return. Main concern: Debt-to-Equity of 10.30x (vs. industry average 1.07x — 862% above peers) with only $9.5M cash creates extreme financial fragility; the 17-point gap between operating margin (29.35%) and net margin (12.27%) quantifies the ongoing interest expense burden; any revenue disruption, credit market tightening, or interest rate spike could impair distributions and equity value disproportionately — this concern is UNCHANGED from the prior report and has marginally worsened (D/E moved from 9.45 to 10.30).
Investment Summary
USA Compression Partners (USAC) at $26.55 remains a compelling growth-at-reasonable-price opportunity in the midstream compression services sector, anchored by a PEG ratio of 0.65 (vs. industry average 1.19 — a 45% discount on growth-adjusted valuation) and a P/E of 24.65x that is 41% below the peer average of 41.87x. The analyst consensus target of $30.17 implies 13.6% price upside, and the MLP structure delivers an additional ~6%+ distribution yield, creating a total return profile exceeding 19% from current levels. Operationally, USAC is an industry standout: operating margin of 29.35% is 177.8% above the industry average of 10.57%, and net margin of 12.27% beats peers at 8.57% despite carrying 862% more leverage. Free cash flow of $284.3M provides robust coverage of debt service and distributions. Q2 2026 results beat both Wall Street estimates and year-ago actuals, and full-year guidance was maintained — confirming management execution. The critical structural risk remains unchanged: Debt-to-Equity of 10.30x versus the industry average of 1.07x creates extreme financial fragility, with only $9.5M cash on hand. Forward EPS growth of 26.54% (next year) and 27.86% (5-year) trails the industry average of 28.36% and 30.27% respectively, meaning the valuation discount is partially rational. Net verdict: Buy with Medium conviction for investors who can accept MLP leverage risk in exchange for superior operational quality and a 19%+ total return profile.
Key Strengths
- PEG ratio of 0.65 vs. industry average 1.19 (45% discount) combined with P/E of 24.65x vs. industry 41.87x (41% discount) — USAC is the cheapest stock in its peer group on both earnings and growth-adjusted valuation, despite superior historical execution (earnings growth 40.9% vs. industry 12.96%); analyst consensus target of $30.17 implies 13.6% price upside plus ~6%+ distribution yield = 19%+ total return
- Operating margin of 29.35% is 177.8% above the industry average of 10.57% — the most dominant relative profitability advantage in the 26-company peer group; net margin of 12.27% still beats industry average of 8.57% despite carrying 862% more leverage, confirming genuinely superior unit economics that persist even after heavy interest expense; Q2 2026 beat both EPS and revenue estimates with year-over-year growth confirmed
- Free cash flow of $284.3M provides robust coverage of debt service and MLP distributions despite near-zero cash balance ($9.5M); 5-year EPS growth projection of 27.86% sustained over multi-year horizon provides durable earnings compounding; redomiciliation to Texas may reduce compliance costs and align regulatory framework with energy partnership peers, a modest but positive structural development
Key Concerns
- Debt-to-Equity of 10.30x (vs. industry average 1.07x — 862% above peers) with only $9.5M cash creates extreme financial fragility; the 17-point gap between operating margin (29.35%) and net margin (12.27%) quantifies the ongoing interest expense burden; any revenue disruption, credit market tightening, or interest rate spike could impair distributions and equity value disproportionately — this concern is UNCHANGED from the prior report and has marginally worsened (D/E moved from 9.45 to 10.30)
- Forward EPS growth of 26.54% (next year) and 27.86% (5-year) trails the industry average of 28.36% and 30.27% respectively — USAC's historical growth superiority is not expected to persist, meaning the valuation discount cannot be fully justified by superior forward growth expectations; the market's lower multiples are partially rational compensation for leverage risk plus forward growth deficit, limiting the margin of safety
Plutrex 10-Factor AI Breakdown
Fundamental Analysis
USAC's fundamentals present a classic high-quality/high-leverage dichotomy. Profitability is exceptional: gross margin 38.51% (vs. industry 28.37%), operating margin 29.35% (vs. industry 10.57% — 177.8% premium), net margin 12.27% (vs. industry 8.57%). The 17-point gap between operating and net margin (29.35% vs. 12.27%) quantifies the interest expense burden from the D/E of 10.30x. ROE of 122.35% is a leverage artifact (D/E 10.30x compresses equity denominator) rather than pure business quality. Growth historically dominant: revenue growth 36.8% (vs. industry 15.17%), earnings growth 40.9% (vs. industry 12.96%), YoY EPS growth 49.3%. Forward growth moderates to 26.54% next year and 27.86% over 5 years — both slightly below industry averages of 28.36% and 30.27%, a meaningful nuance. Valuation: P/E 24.65x (vs. industry 41.87x, 41% discount), PEG 0.65 (vs. industry 1.19, 45% discount) — the market is not fully pricing in operational quality. Financial health is the Achilles heel: D/E 10.30x (vs. industry 1.07x), cash $9.5M, FCF $284.3M. The FCF is the saving grace — it covers distributions and debt service — but the balance sheet has zero margin for error. P/B of 13.31x is a leverage artifact. Intrinsic value assessment: undervalued on PEG basis, with analyst consensus target of $30.17 representing a conservative near-term estimate.
News Sentiment
USA Compression Partners is delivering on its promises — and Wall Street is taking notice. The Texas-based natural gas compression company just reported a strong second quarter, with both earnings and revenues beating analyst estimates while growing year-over-year, according to multiple reports including 'USA Compression Q2 Earnings & Revenues Beat Estimates, Rise Y/Y.' That's not a one-time fluke — it's a pattern of consistent execution that has defined this company's recent history. The 'USA Compression Partners Reports Second-Quarter 2026 Results' release confirmed the company is maintaining its full-year financial outlook, a critical signal that management has confidence in the business trajectory through year-end. The 'USA Compression Partners Q2 Earnings Call Highlights' provided additional color on operational performance, reinforcing the narrative of a well-run infrastructure business generating strong cash flows. Perhaps most intriguing is the company's ongoing redomiciliation to Texas — a structural shift that analysts believe could reduce regulatory compliance costs and better align the partnership with the Texas energy ecosystem where most of its operations are concentrated. Meanwhile, the question 'Is USAC Worth Buying for Growth Despite Margin and Leverage Risks?' — a headline that captures the central investor debate — is being answered by the numbers: a PEG ratio of 0.65 versus the industry average of 1.19 suggests the market hasn't fully priced in the growth story. For income investors, the 6%+ distribution yield sweetens the deal considerably.
Risk Assessment
PRIMARY RISK: Leverage-induced financial fragility. D/E of 10.30x with $9.5M cash means any revenue disruption (natural gas demand decline, contract non-renewals, commodity price collapse) or credit market tightening could trigger distribution cuts or equity dilution — both would be severely negative for unit price. INTEREST RATE RISK: Rising rates increase debt service costs on variable-rate debt, further compressing the already-thin net margin (12.27%). FORWARD GROWTH RISK: USAC's 5-year EPS growth projection of 27.86% trails the industry average of 30.27% — if growth disappoints relative to even these below-peer projections, the valuation discount could widen rather than close. MITIGATION: FCF of $284.3M provides substantial debt service coverage; management maintained full-year guidance in Q2 2026, signaling confidence; the MLP structure incentivizes consistent cash distribution, creating management discipline around capital allocation. POSITION SIZING: 3.5% maximum position size reflects the leverage risk — this is not a core holding for risk-averse portfolios. STOP LOSS at $23.50 (10.4% below entry of $26.25) is set at a level that would signal a distribution cut or credit event rather than normal volatility.
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Frequently Asked Questions
Is USAC a halal stock?
No, USA Compression Partners, LP (USAC) is currently not classified as halal by AAOIFI criteria.
What is Plutrex's AI rating for USAC?
USA Compression Partners, LP (USAC) has a Plutrex AI rating of 73.0/100 with a Buy consensus, based on a 10-factor analysis covering financial health, growth, valuation, profitability, debt, analyst sentiment, technical momentum, insider confidence, news sentiment, and halal compliance.
Is USAC a good investment?
According to Plutrex AI, USAC has a Buy rating (73.0/100). For the full analysis including trading plan and risk assessment, see the detailed breakdown above.
How can I invest in USAC?
US stocks like USAC can be bought through international brokers such as Interactive Brokers, accessible to Arab investors. Plutrex provides comprehensive analysis plus AI-generated trading plans with entry points, stop losses, and profit targets.
What are the main risks of investing in USAC?
Plutrex AI identifies the main risks for USAC by analyzing valuation, debt, market sentiment, and macro factors. See the Risk Assessment section above for the full breakdown.