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Can USA Compression Partners Gain Upward Momentum?

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USAC’s moving average

USA Compression Partners (USAC) continues to trade above both its short-term and long-term moving averages, which indicates bullish sentiment in the stock. It was trading 10.8% and 13.9% above its 50-day SMA and 200-day SMA as of January 19, respectively. In comparison, USAC’s peers Archrock Partners (APLP) and CSI Compressco (CCLP) were trading 12.3% and 21.9% above their 50-day SMAs.

USAC’s recent compression deal with Energy Transfer Partners (ETP)—and a further increase in US drilling activity or natural gas production growth—could push USAC’s stock further above its moving average. On the other hand, a negative earnings surprise, possible dilution from the USAC deal, and a decline in Eagle Ford drilling activity might push USAC below its 50-day and 200-day SMA, resulting in bearish sentiment. USAC’s exposure to the Eagle Ford region is expected to increase following the completion of the deal.

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Short interest in USAC

Short interest in USAC was 0.13 million shares as of January 19, 2018. At the same time, short interest in USAC as a percentage of float ratio was 0.25%, which is lower than the 30-day average of 0.32% and which indicates bullish sentiment in the stock. Moreover, short interest in USAC is lower than the last one-year and three-year averages of 0.5% and 0.6%, respectively.

USAC’s forward EV-to-EBITDA

USAC was trading at a forward EV-to-EBITDA multiple of 9.5x as of January 19, which is slightly below the one-year and three-year averages of 12.2x and 11.3x, respectively. However, USAC’s distribution yield of 11.1% is lower than the one-year yield of 12.6%. A lower distribution compared to the historical average indicates that the partnership is trading at a premium to historical levels.

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