Strong Backlog and Natural Gas Tailwinds Support Archrock's Growth

Archrock Inc. AROC is a leading natural gas compression services provider that supports gas production, processing and transportation. The company has a stable business model, backed by fee-based contracts with long-term customers, which generates stable revenues. Archrock’s business depends on the long-term production of natural gas in the United States, as it drives demand for its compression services.

AROC highlighted that U.S. natural gas production is expected to reach record levels for the sixth consecutive year. The expansion of liquefied natural gas (LNG) export capacity, coupled with increasing power demand from AI-driven data centers, is expected to drive incremental natural gas demand. These factors are likely to support sustained demand for Archrock's compression fleet and earnings growth. Archrock mentioned in its latest earnings call that it has a significant backlog for 2026, with 85% horsepower already contracted. It has started booking horsepower for delivery in 2027. This strong backlog enhances revenue visibility and highlights continued customer demand.

Since natural gas is increasingly gaining importance in the global energy mix, Archrock intends to prioritize investments in its natural gas infrastructure and compression equipment. This will help its customers transport gas more efficiently and with reduced environmental impact. The company has mentioned that it will invest capital in large horsepower and electric motor-driven compression, which is poised to witness strong demand and generate high returns. Archrock is strategically positioning itself to capitalize on sustained growth in natural gas demand and generate long-term value for its shareholders.

Other Energy Sector Players to Benefit From Rising Natural Gas Demand

The rise of data centers and higher gas-fired power demand presents an opportunity for Enbridge Inc. ENB to capitalize on. Data centers require a huge amount of electricity, which is driving rapid growth in gas demand. The shift from coal to gas for power generation is increasing the demand for gas. Enbridge is expected to gain from the expansion of its natural gas storage facilities. ENB carries a Zacks Rank #2 (Buy).

Baker Hughes BKR is well-positioned to capitalize on the rapid growth in energy demand from data centers. In response to rising data center demand, the company is actively enhancing its capabilities through organic investments in this domain. With nearly $1 billion in data center-related orders registered in 2025, the company is working toward reaching its target of $3 billion in three years. The rise in power demand is expected to drive energy-infrastructure investments, which in turn will contribute to higher demand for Baker Hughes’ IET offerings. BKR carries a Zacks Rank #3 (Hold).

AROC’s Price Performance, Valuation & Estimates

Shares of AROC have jumped 38.2% over the past year compared with the 51% improvement of the composite stocks belonging to the industry.

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From a valuation standpoint, AROC trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.37X. This is above the broader industry average of 10.06X.

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The Zacks Consensus Estimate for AROC’s 2026 earnings has witnessed upward revisions over the past 30 days.

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AROC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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