Is USA Compression Partners LP overvalued or undervalued?

As of 6 May 2025, the valuation grade for USA Compression Partners LP has moved from very attractive to risky, indicating a shift in perception regarding its investment potential. The company appears to be overvalued based on its current metrics, particularly with a P/E ratio of 30, which is significantly higher than its peers such as Archrock, Inc. at 20.63 and Cactus, Inc. at 15.31. Additionally, the EV to EBITDA ratio stands at 9.66, which, while reasonable, still suggests a premium compared to the industry averages.
The price to book value is notably negative at -256.56, further complicating the valuation picture and highlighting potential financial distress. With a ROCE of 12.14%, the company's return on capital employed is decent, but the negative return on equity indicates underlying issues. Given these factors, USA Compression Partners LP is currently overvalued relative to its peers and market conditions, despite a relatively strong performance over the past few years compared to the S&P 500.