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Archrock, Inc. (AROC)

Company Dividend Discount ModelIndustry: Oil & Gas Equipment & ServicesSector: Energy

Valuation Snapshot

Stable Growth$31.64 - $73.93$46.45
Multi-Stage$24.74 - $26.99$25.84
Blended Fair Value$36.15
Current Price$26.31
Upside37.39%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS7.04%10.60%0.630.550.520.510.510.450.330.200.200.24
YoY Growth--15.22%6.07%1.09%0.58%13.12%34.73%71.12%-2.46%-16.02%3.14%
Dividend Yield--2.41%2.77%5.29%5.54%5.36%11.96%3.34%2.23%1.61%2.98%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)265.28
(-) Cash Dividends Paid (M)135.42
(=) Cash Retained (M)129.86
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)53.0633.1619.90
Cash Retained (M)129.86129.86129.86
(-) Cash Required (M)-53.06-33.16-19.90
(=) Excess Retained (M)76.8096.70109.96
(/) Shares Outstanding (M)174.60174.60174.60
(=) Excess Retained per Share0.440.550.63
LTM Dividend per Share0.780.780.78
(+) Excess Retained per Share0.440.550.63
(=) Adjusted Dividend1.221.331.41
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.04%6.04%7.04%
Fair Value$31.64$46.45$73.93
Upside / Downside20.27%76.55%180.98%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)265.28281.31298.32316.35335.47355.75366.43
Payout Ratio51.05%58.84%66.63%74.42%82.21%90.00%92.50%
Projected Dividends (M)135.42165.52198.76235.42275.79320.18338.94

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.04%6.04%7.04%
Year 1 PV (M)150.31151.74153.17
Year 2 PV (M)163.91167.05170.22
Year 3 PV (M)176.31181.39186.57
Year 4 PV (M)187.56194.80202.26
Year 5 PV (M)197.74207.33217.29
PV of Terminal Value (M)3,442.903,609.923,783.37
Equity Value (M)4,318.724,512.244,712.88
Shares Outstanding (M)174.60174.60174.60
Fair Value$24.74$25.84$26.99
Upside / Downside-5.99%-1.77%2.59%

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