Investment Thesis
USA Compression demonstrates solid operational performance with strong operating margins (27.6%) and robust free cash flow generation (18.7% margin), supported by net income growth of 11.8% YoY outpacing revenue growth. However, material balance sheet risks including high leverage (debt $3.0B on $3.7B assets) and weak interest coverage (2.0x) significantly constrain financial flexibility and create vulnerability to operational disruptions or market downturns.
Strengths
- Strong operating margin of 27.6% and net margin of 11.6% indicates operational efficiency
- Excellent free cash flow generation at $61.9M with 18.7% FCF margin demonstrates cash-generating capability
- Net income growth (11.8% YoY) outpacing revenue growth (5.0%) suggests operational leverage and cost discipline
- Adequate current ratio of 1.55x supports near-term liquidity management
Risks
- Critically weak interest coverage ratio of 2.0x leaves insufficient cushion for operational disruptions or market volatility
- Severe balance sheet leverage with $3.0B debt representing 81% of total assets, limiting financial flexibility
- Minimal cash position of $14.5M and quick ratio of 0.86x indicates constrained liquidity buffers
- Modest revenue growth of 5% YoY in a regulated industry with limited organic expansion optionality
Key Metrics to Watch
- Interest coverage ratio trending above 2.5x to reduce debt servicing risk
- Operating cash flow sustainability and free cash flow margin maintenance above 18%
- Debt-to-assets ratio and deleveraging progress toward healthier capital structure
- Revenue growth acceleration beyond 5% YoY indicating market expansion
Financial Metrics
Revenue
331.3M
Net Income
38.3M
EPS (Diluted)
$0.00
Free Cash Flow
61.9M
Total Assets
3.7B
Cash
14.5M
Profitability Ratios
Gross Margin
9.4%
Operating Margin
27.6%
Net Margin
11.6%
ROE
N/A
ROA
1.0%
FCF Margin
18.7%
Balance Sheet & Liquidity
Current Ratio
1.55x
Quick Ratio
0.86x
Debt/Equity
N/A
Debt/Assets
91.5%
Interest Coverage
1.96x
Long-term Debt
3.0B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T08:42:23.526841 |
Data as of: 2026-03-31 |
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