Economic News

Archrock, Inc. (AROC): Scrutinizing the Chart

Over the last few days fluctuation in the stock of Archrock, Inc. (NYSE:AROC) was the main talking point of investors. At the end of the day, it’s only a stock’s performance that matters. With this in mind, it’s worth taking a look at the chart to get a sense of where it might be headed in the future.

How has the stock performed recently?

Archrock, Inc. (NYSE:AROC) has been trading in a bearish manner, based on the relative positions of the stock’s 20 and 200 day moving averages. In the last month, the price of AROC has decreased -18.34%. Shares are now down -16.89% over the past year, underperforming the broad market by -244.98% and outperformed a peer group of similar companies by 3258%. After the latest session, which saw the stock close at a price of $9.35, AROC sits -42.99% below its 52-week high.

Momentum indicators

Of course, these surface-level price movements don’t tell us much about the direction that AROC may be headed in the future. In order to predict this, technical analysts look at momentum indicators, which measure the speed and magnitude of these price movements. The idea is that as momentum slows, it may signal the approach of key support or resistance levels and a reversal of recent trends. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for AROC is 33.28%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 5.84%, tells a different story, and suggests that AROC currently trades in oversold territory.

What do the trading volumes reveal?

Price isn’t the only tool analysts use to forecast future performance. Volume patterns can also reveal some important insights. If, for instance, a stock’s volumes suddenly increase by a significant amount, it’s usually a sign that the level of conviction behind the trade is high. Investors may feel very strongly about the future direction of the stock in question. Archrock, Inc. (AROC) average trading volume of 498,940 during the past month is 16.13% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.

What do the analysts think?

AROC is currently undervalued by -30.95% relative to the average 1-year price target of $13.54 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.80, which implies that analysts are generally neutral in their outlook for AROC over the next year.

How risky is the stock? 

When analyzing a stock’s price performance, it’s essential to take risk into account. Beta, which measures a stock’s volatility relative to the overall market, can be used to gauge the level of systematic risk associated with a particular stock.

Archrock, Inc. (NYSE:AROC) has a beta of 3.41, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. AROC therefore has a above average level of market risk. During the past couple of weeks, AROC average daily volatility was 25.65%, which is 17.84 percentage points lower than the average volatility over the past 100 days.

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