A Look at USA Compression Partners’s Valuation Following $750 Million Debt Refinancing Move

USA Compression Partners Sets Stage for Lower Debt Costs With $750 Million Note Offering

If you’re watching USA Compression Partners (USAC) this week, the company’s latest move may have caught your eye. USA Compression Partners just priced a private placement of $750 million in 6.250% senior unsecured notes due 2033, using the funds to redeem its higher-cost 6.875% notes maturing in 2027. Not only does this shuffle the company’s debt stack, but it could also ease future interest expenses, a key consideration for income-focused investors and anyone weighing the stock’s next move.

Looking at the bigger picture, USA Compression Partners has delivered a solid 10% total return over the past year. There’s also the long-term context: the stock has gained a strong 292% in the past five years. While recent months have seen modest declines, the steady momentum over the longer horizon suggests investors haven’t lost faith. This debt refinancing is just the latest in a string of capital moves aimed at strengthening the company’s financial foundation.

With the new notes in play and the company’s cost of debt potentially trending downward, is USA Compression Partners now undervalued, or has the market already baked in the benefits of these changes?

Most Popular Narrative: 12.2% Undervalued

According to the most widely followed narrative, USA Compression Partners looks undervalued, trading at a double-digit discount to its estimated fair value.

Robust growth in natural gas demand, fueled by AI, cloud computing, and massive new data center investments, is driving a sustained need for reliable, high-horsepower compression solutions. This positions USAC for ongoing contract wins and steady revenue growth. Continued expansion in LNG export capacity and related infrastructure is creating long-term volume growth opportunities for midstream service providers. These factors favor USAC's specialized fleet and support utilization, earnings, and margin strength.

Curious how analysts are justifying this bullish price target? There is one core assumption that could propel USAC well above current levels. Their model hints at accelerated profit growth and a future valuation multiple not usually expected for a midstream energy stock. Want to see what is fueling their optimism and how it compares to sector averages? Review the numbers that underpin this notable valuation.

Result: Fair Value of $26.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, concentrated exposure to a few key customers and rising operational costs could quickly disrupt the bullish narrative if conditions worsen.

Find out about the key risks to this USA Compression Partners narrative.

Another View: What Do the Numbers Say?

Looking at things from another angle, our DCF model also suggests that USA Compression Partners is undervalued by the market. The question is, do you trust this cash-flow-based approach, or does it miss something crucial?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding USA Compression Partners to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own USA Compression Partners Narrative

If you want to dive into the details or draw your own conclusions, you can quickly build a personalized narrative from the data in just minutes. Do it your way

A great starting point for your USA Compression Partners research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

Looking for More Smart Investment Ideas?

Challenge yourself to take the next step in building a standout portfolio. The market never waits, and unique opportunities are always just a few clicks away. Check out these handpicked angles that investors like you are capitalizing on right now:

• Target consistent earnings by tapping into dividend stocks with yields > 3%. This selection features companies rewarding their shareholders with robust, above-average yields.
• Unleash growth potential by following the surge in AI innovation with AI penny stocks. Here, tomorrow’s tech giants are emerging.
• Supercharge your strategy by zeroing in on undervalued stocks based on cash flows. This list features quality businesses trading below their intrinsic worth for those seeking long-term upside.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com