What USA Compression Partners offers and how the market has treated it
USA Compression Partners (USAC) focuses on providing natural gas compression and treating services across the United States, serving oil producers, midstream operators, and infrastructure projects tied to gathering systems and processing facilities.
The partnership reports annual revenue of US$998.1m and net income of US$103.0m, with operations supported by a 3.9 million horsepower compression fleet and additional gas treating, cooling, and dehydration capabilities.
At a recent unit price of US$27.57 and a market cap of about US$4.0b, USA Compression Partners has posted a 26.8% total return over the past year and 67.6% over the past 3 years.
Looking further back, the 5 year total return stands at 185.3%, while shorter term moves have been mixed, with a 0.4% gain over the past month and a 0.1% return over the past 3 months.
See our latest analysis for USA Compression Partners.
Recent moves have been steady rather than dramatic, with a 10.1% 3 month share price return alongside a much stronger 5 year total shareholder return of 185.3%. This suggests that longer term momentum has been more meaningful than short term swings.
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With USAC units sitting near US$27.57 and only a small discount to the average analyst price target, the key question is whether recent strength leaves limited upside or whether the market is still underestimating future growth potential.
Most Popular Narrative: 2.1% Undervalued
With USA Compression Partners last closing at $27.57 against a narrative fair value of $28.17, the most followed view sees modest upside supported by specific growth and margin assumptions built on detailed cash flow forecasts and a defined discount rate of 8.08%.
Early-stage implementation of shared services with Energy Transfer is generating operational efficiencies and anticipated cost savings (notably in G&A and procurement). This is setting up for net margin expansion and improved free cash flow as these benefits are fully realized over 2026 and beyond.
Curious what kind of revenue climb and margin lift need to unfold to justify that fair value gap, and what earnings level the narrative is aiming for by the end of the decade.
Result: Fair Value of $28.17 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, heavy dependence on a few large customers and rising capital and compliance costs could pressure contract terms, margins, and the overall growth narrative if conditions shift.
Find out about the key risks to this USA Compression Partners narrative.
Another angle on what the units are worth
The analyst narrative points to fair value around $28.17, but our DCF model tells a slightly different story. On those cash flow assumptions, USAC units at $27.57 sit above an estimated value of $27.02. That suggests a small premium rather than a clear bargain. How much weight do you want to give that gap?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out USA Compression Partners for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 59 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
With mixed signals on value, risks, and rewards running through this piece, this is a good time to move quickly, test the numbers against your own expectations, and then check the 2 key rewards and 5 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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