USA Compression Partners (USAC): Evaluating Valuation Following Strong Q3 Revenue and Profit Growth

USA Compression Partners just released its third quarter results, showing clear growth in both revenue and net income. The company’s improved quarterly earnings per share signals a solid boost in profitability and operating strength.

See our latest analysis for USA Compression Partners.

After delivering a robust earnings beat and reporting a notable jump in profitability, USA Compression Partners has continued to attract investor attention. While the latest share price sits at $23.83, the partnership’s 1-year total shareholder return of 13.64% highlights steady momentum. Longer-term returns show even greater strength and signal solid underlying confidence in the business over time.

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With shares trading below analyst targets but following a strong earnings beat, is USA Compression Partners currently undervalued, or has the market already priced in expectations for continued growth? Is there still a buying opportunity?

Most Popular Narrative: 10.1% Undervalued

Compared to the last close of $23.83, the most widely followed narrative suggests USA Compression Partners carries a fair value of $26.50. This frames recent performance in a more optimistic light and raises questions about where the market is heading next.

Robust growth in natural gas demand fueled by AI, cloud computing, and massive new data center investments is driving a sustained need for reliable, high-horsepower compression solutions. This positions USAC for ongoing contract wins and steady revenue growth. Continued expansion in LNG export capacity and related infrastructure is creating long-term volume growth opportunities for midstream service providers. This favors USAC's specialized fleet and supports utilization, earnings, and margin strength.

Read the complete narrative.

Curious about what underpins this high fair value? The heart of this narrative is a bold bet on earnings acceleration and margin expansion backed by the largest industry tailwinds in a decade. Wonder which ambitious forecasts are waiting inside? Find out what drives the confidence behind this premium target.

Result: Fair Value of $26.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, heavy reliance on a few key customers and rising operational costs could threaten USA Compression Partners' long-term revenue stability and margin growth.

Find out about the key risks to this USA Compression Partners narrative.

Another View: Multiples Paint a Mixed Picture

Looking from another angle, the current price-to-earnings ratio of 30.4x is higher than the US Energy Services industry average of 16.5x, but closely matches peer averages at 31.7x. However, this is still well above the fair ratio of 19.6x that the market could move towards. This suggests a risk if expectations slip. Could this premium really hold up, or is the stock priced for perfection?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own USA Compression Partners Narrative

If you have a different perspective or want to put the data to the test yourself, you can shape your own story in just minutes with Do it your way.

A great starting point for your USA Compression Partners research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.