Where Does USA Compression Partners (USAC) Value Sit After 187% Gains?
USA Compression Partners has delivered a very strong 5 year return, yet current checks suggest the stock is no obvious bargain, with the Discounted Cash Flow (DCF) estimate pointing to roughly fair value while market based multiples lean expensive.
- Around 187.1% over 5 years points to a powerful compounding story that already prices in a lot of good news.
- The recent launch of a US$600 million senior notes offering can support refinancing and financial flexibility. However, higher leverage and future interest costs may weigh on how investors think about long term cash generation.
- The broader valuation framework, where USA Compression Partners scores 1 out of 6, leans expensive rather than a clear bargain. This is despite the DCF suggesting the current price is close to intrinsic value.
The issue now is whether USA Compression Partners offers enough potential reward at this level to compensate for a stock that screens as fully valued on most checks.
Scan beyond USA Compression Partners and weigh it against 31 high quality undervalued stocks, which pairs stronger value scores with solid fundamentals.
Does USA Compression Partners Look Fairly Valued on Cash Flow?
The Discounted Cash Flow (DCF) approach here values USA Compression Partners on the cash it is expected to generate for equity holders over time. Latest twelve month free cash flow sits at about $249.1 million, and the model assumes that future cash generation grows from this base rather than shrinking. On that set of projections, the DCF model points to an intrinsic value of about $27.34 per unit.
Compared with the current trading level, that estimate implies the stock is roughly 1.1% above the DCF value, which is broadly in line with underlying cash flows. The recent launch of the $600 million senior notes due 2035 helps explain why investors are focused on how future interest costs interact with those projected cash flows. Taken together, the DCF work suggests USA Compression Partners is near its calculated worth rather than offering a clear discount.
On this cash flow view, USA Compression Partners appears to be fairly valued at current prices.
USA Compression Partners is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.
Is USA Compression Partners Getting Expensive on Earnings?
P/E works reasonably well for USA Compression Partners because the partnership reports positive earnings and trades in a sector where investors often benchmark on profit multiples. On that score, the stock changes hands at about 27.8x earnings, which sits slightly above the Energy Services sector average of roughly 26.1x and well below a peer group average near 59.8x.
The more tailored fair P/E ratio for USA Compression Partners, which factors in its size, risk profile and sector economics, comes out closer to 21.1x. That benchmark sits meaningfully under the current 27.8x level, so the units trade at a premium to what this framework flags as a more grounded earnings multiple.
On the P/E lens, USA Compression Partners screens as overvalued compared with the earnings multiple that model suggests would be more reasonable.
See what the numbers say about this price — find out in our valuation breakdown.
The USA Compression Partners Narrative: What Would Justify Today's Price?
USA Compression Partners' Simply Wall St Narratives pick up where the valuation puzzle leaves you by spelling out which future paths for revenue, margins and earnings would need to play out for the units to be worth significantly more or less than the current quote on the screen. Instead of stopping at a single ratio or model output, they set out the future conditions that number assumes, so you can monitor whether that story keeps lining up with what actually happens. These sit on Simply Wall St's Community page and turn the abstract question of "what is priced in" into a set of concrete business outcomes you can watch over time.
Use Simply Wall St's Narratives to add your own number driven view on USA Compression Partners, including a clear stance on whether the new US$600 million senior notes due 2035 ultimately help or hurt unitholder value. Share your thesis, track how it compares with future results, and see how your call aligns with what other investors are watching.
Do you think there's more to the story for USA Compression Partners? Head over to our Community to see what others are saying!
The Bottom Line
USA Compression Partners looks roughly aligned with its Discounted Cash Flow intrinsic value, while the P/E work points to an overvalued multiple that leans on generous expectations. That split comes down to what investors believe about future cash needs, interest costs on the new notes, and how much growth the market is baking into the current P/E. The broader low value score keeps the burden of proof on the bullish side. The key question from here is whether cash generation and balance sheet management justify that richer earnings multiple, or whether the units simply settle into a more ordinary valuation.
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.
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