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Baker Hughes Company (BKR)
NASDAQ:BKR
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Baker Hughes Company
(NASDAQ:BKR)79Outperform
Positive Factors
Financial Performance
The results for the fourth quarter showed a strong performance with revenue, EBITDA, and total orders exceeding expectations.
Industrial & Energy Technology Segment
The Industrial & Energy Technology segment significantly outperformed expectations, indicating strong growth potential.
Negative Factors
International Market Conditions
International softness in regions like Saudi Arabia, Mexico, Asia Pacific, and Europe is expected to offset strength in Sub-Saharan Africa and Subsea.
Baker Hughes Company (BKR) vs. S&P 500 (SPY)
Market Cap
$42.44B
Dividend Yield1.97%
Average Volume (3M)7.91M
Price to Earnings (P/E)14.4
Beta (1Y)0.68
Revenue Growth9.10%
EPS Growth55.56%
CountryUS
Employees57,000
SectorEnergy
Sector Strength57
IndustryFossil Fuels
Share Statistics
EPS (TTM)2.98
Shares Outstanding990,111,900
10 Day Avg. Volume7,163,023
30 Day Avg. Volume7,914,939
Financial Highlights & Ratios
PEG Ratio0.26
Price to Book (P/B)N/A
Price to Sales (P/S)1.55
Price to Cash Flow (P/CF)9.10
P/FCF Ratio8.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$53.14Price Target Upside23.99% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering21
Baker Hughes Company Business Overview & Revenue Model
Company DescriptionBaker Hughes Company (BKR) is a global energy technology company that provides solutions for energy and industrial customers worldwide. It operates through two segments: Oilfield Services & Equipment (OFSE) and Industrial & Energy Technology (IET). The company offers a wide array of products and services, including oilfield equipment, digital solutions, and energy transition technologies, aimed at enhancing productivity and efficiency for its clients in the oil and gas industry and other sectors.
How the Company Makes MoneyBaker Hughes generates revenue primarily through the sale of its products and services across its two main business segments. The Oilfield Services & Equipment segment offers drilling services, evaluation, completion, and production services, as well as integrated well services and products. This segment's revenue is largely influenced by global oil and gas exploration, drilling activities, and production levels. The Industrial & Energy Technology segment provides advanced technologies and services for industrial applications, including turbomachinery & process solutions and digital solutions, catering to a range of industries like power generation and renewable energy. The company's earnings are also supported by strategic partnerships and collaborations with oil and gas companies, as well as investments in digital and energy transition solutions, which help expand its market reach and enhance service offerings.
Baker Hughes Company Financial Statement Overview
Summary
Baker Hughes demonstrates strong financial health with impressive revenue and profit growth, supported by solid profitability margins and efficient cash generation. The balance sheet is robust with low leverage, providing financial stability. The company appears well-positioned to capitalize on industry opportunities while managing risks associated with the fossil fuels sector.Income Statement
Baker Hughes has shown strong revenue growth of 9.08% over the past year (TTM), with significant improvements in profitability, evidenced by a net profit margin of 10.70% and a gross profit margin of 20.99%. The EBIT margin is robust at 11.15%, demonstrating effective cost management and operational efficiency. The company has recovered well from previous losses, with net income turning positive. Overall, the income statement reflects a well-managed and growing business.85
Very Positive
Balance Sheet
The balance sheet indicates a solid equity position with a debt-to-equity ratio of 0.31, suggesting manageable leverage. The equity ratio stands at 50.57%, indicating a strong capital base. Return on equity has improved to 15.36%, reflecting efficient use of shareholders' funds. While the balance sheet shows a healthy financial structure, the industry’s capital-intensive nature always poses potential risks.78
Positive
Cash Flow
Cash flow analysis reveals a strong operating cash flow to net income ratio of 1.12, indicating effective cash generation from operations. Free cash flow grew by 30.88% over the previous year, highlighting improved cash efficiency and potential for reinvestment or debt reduction. The free cash flow to net income ratio is 0.81, showcasing substantial cash conversion from profits. The company's cash flow position is robust, supporting its growth and investment capabilities.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 27.83B | 25.51B | 21.16B | 20.54B | 20.70B | Gross Profit |
| 5.91B | 5.25B | 4.40B | 4.05B | 3.20B | EBIT |
| 3.08B | 2.65B | 1.19B | 996.00M | 1.83B | EBITDA |
| 4.60B | 3.96B | 1.33B | 1.83B | -13.62B | Net Income Common Stockholders |
| 2.98B | 1.94B | -578.00M | -330.00M | -15.76B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 3.36B | 2.65B | 2.49B | 3.85B | 4.13B | Total Assets |
| 38.36B | 36.95B | 34.18B | 35.35B | 38.03B | Total Debt |
| 6.02B | 6.02B | 6.66B | 6.73B | 7.63B | Net Debt |
| 2.66B | 3.38B | 4.17B | 2.87B | 3.50B | Total Liabilities |
| 21.31B | 21.43B | 19.66B | 18.60B | 19.79B | Stockholders Equity |
| 17.05B | 15.37B | 14.53B | 16.75B | 18.24B |
| Cash Flow | Free Cash Flow | |||
| 3.33B | 1.84B | 1.12B | 1.83B | 517.00M | Operating Cash Flow |
| 3.33B | 3.06B | 1.89B | 2.37B | 1.30B | Investing Cash Flow |
| -1.02B | -817.00M | -1.56B | -463.00M | -618.00M | Financing Cash Flow |
| -1.53B | -2.03B | -1.59B | -2.14B | 225.00M |
Baker Hughes Company Technical Analysis
Negative
42.86
Price Trends
44.23
Negative
42.27
Positive
38.15
Positive
Market Momentum
-0.37
Positive
38.30
Neutral
25.61
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BKR, the sentiment is Negative. The current price of 42.86 is below the 20-day moving average (MA) of 45.78, below the 50-day MA of 44.23, and above the 200-day MA of 38.15, indicating a neutral trend. The MACD of -0.37 indicates Positive momentum. The RSI at 38.30 is Neutral, neither overbought nor oversold. The STOCH value of 25.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BKR.
Baker Hughes Company Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $42.44B | 14.40 | 17.47% | 1.97% | 9.10% | 55.56% | |
77 Outperform | $11.35B | 14.10 | 27.24% | 0.71% | 16.23% | 1403.29% | |
75 Outperform | $21.71B | 8.83 | 23.81% | 2.72% | -0.32% | -3.41% | |
75 Outperform | $5.39B | 8.83 | 9.96% | 1.93% | 3.42% | -35.98% | |
72 Outperform | $54.15B | 12.82 | 26.64% | 2.79% | 9.58% | 6.53% | |
65 Neutral | $2.23B | 13.99 | 20.47% | ― | 9.75% | 50.93% | |
57 Neutral | $8.34B | 5.35 | -5.98% | 7.29% | 0.20% | -69.45% |
* Energy Sector Average
Performance Comparison
BKR
Baker Hughes Company
42.86
13.00
43.54%
FTI
TechnipFMC
26.98
5.55
25.90%
HAL
Halliburton
24.15
-10.63
-30.56%
NOV
NOV
14.16
-2.80
-16.51%
OII
Oceaneering International
20.15
0.09
0.45%
SLB
Schlumberger
39.08
-9.66
-19.82%
Baker Hughes Company Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -3.42% | Next Earnings Date: Apr 16, 2025
Earnings Call Sentiment Positive
Baker Hughes has demonstrated strong financial performance with record-breaking revenue, free cash flow, and margin expansion. The company has shown significant growth in new energy orders and digital services. However, there are concerns regarding potential decreases in spending in key markets and economic uncertainties. Despite these challenges, the highlights significantly outweigh the lowlights.Highlights
Record Financial Performance
Baker Hughes set new quarterly and annual records for revenue, free cash flow, and adjusted EPS, EBITDA, and EBITDA margin. Adjusted EPS increased by 37% from Q4 2023 and 47% for the full year.
Strong Orders and Growth in New Energy
Industrial and energy technology orders remained strong, with $3.8 billion in the fourth quarter and $1.3 billion in new energy orders, representing 70% year-over-year growth.
Growth in Gas Technology Services
Gas Tech Services secured over $1 billion of long-term service agreements for the second consecutive year, with digital orders increasing by approximately 60%.
Free Cash Flow and Dividend Increase
Baker Hughes generated record annual free cash flow of $2.3 billion. The company announced a 10% increase in dividends, marking the fourth consecutive year of dividend growth.
Margin Expansion Across Segments
Adjusted EBITDA margins increased by 1.8 percentage points year-on-year to 17.8%, driven by margin expansion in both Industrial and Energy Technology and Oilfield Services & Equipment segments.
Lowlights
Challenges in North America and International Markets
Expectations of decreased spending in North America in 2025 and flat to down spending in international markets, with specific challenges in Mexico, Saudi Arabia, and the North Sea.
Potential Economic and Geopolitical Uncertainties
Baker Hughes anticipates navigating several economic and geopolitical uncertainties in 2025, which could lead to uneven global economic growth.
Company Guidance
During the Baker Hughes Fourth Quarter 2024 Earnings Conference Call, Lorenzo Simonelli, Chairman & CEO, provided comprehensive guidance on the company's strong financial performance and future outlook. The company achieved a record adjusted EBITDA margin of 17.8% in the fourth quarter, with adjusted earnings per share increasing by 37% from the previous year. Total orders for the year reached $28.2 billion, driven by robust performance in industrial and energy technology, including $3.8 billion in Q4. Free cash flow for the quarter was $894 million, contributing to a record annual free cash flow of $2.3 billion, representing a conversion rate of 49%. Looking ahead, Baker Hughes forecasts total company revenue of $27.75 billion and EBITDA of $4.95 billion for 2025, with a continued focus on capital return, targeting a 45% to 50% free cash flow conversion rate. The company anticipates strong order levels in industrial and energy technology, with expected IET orders between $12.5 billion to $14.5 billion, supported by growth in LNG and gas infrastructure projects.Baker Hughes Company Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Baker Hughes Appoints New CFO Amid Strategic Transformation
Positive
Feb 24, 2025
On February 24, 2025, Baker Hughes announced the appointment of Ahmed Moghal as the new Executive Vice President and Chief Financial Officer, succeeding Nancy Buese. This executive transition is part of Baker Hughes’ strategic transformation efforts, aiming to drive profitable growth and enhance margins across its business segments. The company reaffirmed its financial outlook for 2025, highlighting expectations of EBITDA growth and a commitment to returning a significant portion of free cash flow to shareholders.
DividendsBusiness Operations and StrategyFinancial Disclosures
Baker Hughes Reports Strong 2024 Financial Performance
Positive
Jan 30, 2025
On January 30, 2025, Baker Hughes Company announced its fourth-quarter and full-year 2024 financial results, showcasing a year of strong performance. The company reported record revenue growth, free cash flow, and improvements in adjusted earnings per share and EBITDA, driven by significant orders in its Industrial & Energy Technology segment. The company highlighted its strategic focus on profitable growth and margin improvement, with a strong performance in gas infrastructure and LNG technology solutions, including major contracts and service agreements globally. These results reflect Baker Hughes’ successful execution and enhanced market position, allowing for increased shareholder returns, including a 10% dividend increase.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.