USA Compression Partners (USAC) Pulled Back Recently, Is The Discount Now Too Wide?
USA Compression Partners (USAC) has been drawing attention after recent trading left the units about 6.8% lower over the past month, even as year to date performance and longer term total returns remain positive.
Recent trading has shifted the tone for USA Compression Partners, with the 30 day share price return down 6.8% and the 90 day share price return also weaker, even though the year to date share price return of 6.9% and a 5 year total shareholder return of 138.1% still point to a strong longer term outcome.
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USA Compression Partners now trades about 5% below an estimated intrinsic value and roughly 18% below analyst targets after that pullback. Is this a sensible discount for the risks, or has caution gone too far?
Most Popular Narrative: 15% Undervalued
USA Compression Partners is framed as undervalued in the most followed narrative, with a fair value of $30 against the recent $25.42 close. This puts the focus squarely on how durable gas demand and tight compression capacity really are.
Ongoing tightness in large horsepower compression, reflected in engine lead times that have extended to about 200 weeks and customers contracting capacity several years ahead, gives USA Compression Partners multi year visibility on deployments and underpins revenue and cash flow.
See why 6 investors see USA Compression Partners as 15% undervalued.
Result: Fair Value of $30 (UNDERVALUED)
Still, USA Compression Partners faces real pressure if higher lube oil costs and lower margin manufacturing erode profitability, or if elevated leverage tightens flexibility just as capex needs stay heavy.
Find out about the key risks to this USA Compression Partners narrative.
Next Steps
Mixed views like these are exactly where your own judgment matters most, so take a fresh look at USA Compression Partners and weigh both sides by checking the 3 key rewards and 3 important warning signs
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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.
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