Archrock Inc (NYSE:AROC) Shares Retreat then Recover Despite Earnings Miss

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Archrock Inc (NYSE:AROC) shares fell more than 40% on Tuesday after the company reported downbeat earnings figures. However, prices recovered 22.06% to $7.47 the next day.

Archrock Inc (NYSE:AROC) reported significantly weaker earnings figures for the first quarter of the year of 7.1 cents compared to the previous year’s $0.27 EPS. Still, this outpaced analysts’ expectations at 0.5 cents. The company generated revenue of $213.29 million, which missed the $224 million consensus forecast and represented a 70% decline from the $729.08 million revenue for the same quarter last year.

In addition, Archrock Inc (NYSE:AROC) announced that it would slash quarterly dividends by 50%.  “To address leverage concerns in this challenging market, Archrock Partners reduced its distribution by 50 percent for the first quarter ended March 31, 2016,” announced Archrock CEO Brad Childers. “We believe the steps we are taking at this time will strengthen both companies and increase the long-term value of our businesses.”

Its Board has approved a 50% reduction in the quarterly dividend to 9.5 cents, lower than the 18.75 cents paid in the previous quarter. This revised dividend is payable on May 18 to all shareholders of record, as of the closing bell on May 12.

A number of stock analysts have downgraded the stock to “Underperform” with volume rising to 1.97 million shares trading hands after the announcement compared to the average daily trading volume of 745,290 shares. RBC Capital downgraded Archrock from a “sector perform” rating to an “underperform” rating and cut their price target for the stock from $9.00 to $4.00. Prior to the earnings release, Scotiabank and Howard Weil upgraded their outlook for the stock.

Archrock Inc (NYSE:AROC) was formerly known as Exterran Holdings, Inc. It is engaged in providing natural gas contract compression services to customers in the oil and natural gas industry throughout the United States. The company also provides aftermarket services to customers that own compression equipment in the United States.

 

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