Baker Hughes (NasdaqGS:BKR) - Share price, News & Analysis

Q: What is the Fair Price of BKR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

BKR ($28.87) is trading below our estimate of [[fair value]] ($32.97)

BKR fundamental analysis
Snowflake Score
Valuation	1/6
Future Growth	3/6
Past Performance	2/6
Financial Health	5/6
Dividends	2/6

BKR Stock Overview

Baker Hughes Company provides a portfolio of technologies and services to energy and industrial value chain worldwide.

Rewards

Trading at 12.4% below our estimate of its fair value

Earnings are forecast to grow 46.89% per year

Became profitable this year

Risk Analysis

Dividend of 2.49% is not well covered by earnings

Large one-off items impacting financial results

Significant insider selling over the past 3 months

Baker Hughes Competitors

Halliburton

NYSE:HAL

US$28.3b

Schlumberger

NYSE:SLB

US$50.5b

ProFrac Holding

NasdaqGS:PFHC

US$2.7b

Cactus

NYSE:WHD

US$3.1b

Price History & Performance

Summary of all time highs, changes and price drops for Baker Hughes
Historical stock prices
Current Share Price	US$28.87
52 Week High	US$39.78
52 Week Low	US$19.23
Beta	1.48
1 Month Change	-19.76%
3 Month Change	-20.73%
1 Year Change	22.64%
3 Year Change	17.79%
5 Year Change	-21.99%
Change since IPO	11.58%

Recent News & Updates

May 16

Here's What To Make Of Baker Hughes' (NASDAQ:BKR) Decelerating Rates Of Return

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'd want to...

May 04

Baker Hughes: Solid Growth Expected In 2022

Revenues were $4,835 million this quarter, up 1.1% from the same quarter a year ago and down 11.9% quarter over quarter. Revenues were lower than expected. The company anticipates a solid energy demand driven by economic growth in 2022. I recommend buying BKR at or below $30.5.

Shareholder Returns

	BKR	US Energy Services	US Market
7D	0.7%	3.3%	-0.6%
1Y	22.6%	8.6%	-21.7%

Return vs Industry: BKR exceeded the US Energy Services industry which returned 14.9% over the past year.

Return vs Market: BKR exceeded the US Market which returned -20.8% over the past year.

Price Volatility

Is BKR's price volatile compared to industry and market?
BKR volatility
BKR Average Weekly Movement	6.5%
Energy Services Industry Average Movement	9.3%
Market Average Movement	8.0%
10% most volatile stocks in US Market	16.8%
10% least volatile stocks in US Market	3.2%

Stable Share Price: BKR is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: BKR's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
n/a	55,000	Lorenzo Simonelli	https://www.bakerhughes.com

Baker Hughes Company provides a portfolio of technologies and services to energy and industrial value chain worldwide. It operates through four segments: Oilfield Services (OFS), Oilfield Equipment (OFE), Turbomachinery & Process Solutions (TPS), and Digital Solutions (DS). The OFS segment offers exploration, drilling, wireline, evaluation, completion, production, and intervention services; and drilling and completions fluids, wireline services, downhole completion tools and systems, wellbore intervention tools and services, pressure pumping systems, oilfield and industrial chemicals, and artificial lift technologies for oil and natural gas, and oilfield service companies.

Baker Hughes Fundamentals Summary

How do Baker Hughes's earnings and revenue compare to its market cap?
BKR fundamental statistics
Market Cap	US$29.63b
Earnings (TTM)	US$305.00m
Revenue (TTM)	US$20.56b

93.2x

P/E Ratio

1.4x

P/S Ratio

Is BKR overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
BKR income statement (TTM)
Revenue	US$20.56b
Cost of Revenue	US$16.39b
Gross Profit	US$4.16b
Other Expenses	US$3.86b
Earnings	US$305.00m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Jul 20, 2022

Earnings per share (EPS)	0.31
Gross Margin	20.24%
Net Profit Margin	1.48%
Debt/Equity Ratio	40.6%

How did BKR perform over the long term?

See historical performance and comparison

Dividends

2.5%

Current Dividend Yield

206%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is BKR undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

1/6

Valuation Score 1/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for BKR?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for BKR. This is calculated by dividing BKR's market cap by their current preferred multiple.
What is BKR's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$29.63b

BKR key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1.5x
Enterprise Value/EBITDA	11.4x
PEG Ratio	2x

Price to Earnings Ratio vs Peers

How does BKR's PE Ratio compare to its peers?

BKR PE Ratio vs Peers

The above table shows the PE ratio for BKR vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	46.9x
HAL Halliburton	18.2x	26.3%	US$28.3b
SLB Schlumberger	24.2x	23.5%	US$50.5b
PFHC ProFrac Holding	103.6x	92.6%	US$2.7b
WHD Cactus	41.5x	45.2%	US$3.1b
BKR Baker Hughes	93.2x	46.9%	US$29.6b

Forward PE

Price-To-Earnings vs Peers: BKR is expensive based on its Price-To-Earnings Ratio (93.2x) compared to the peer average (46.9x).

Price to Earnings Ratio vs Industry

How does BKR's PE Ratio compare vs other companies in the US Energy Services Industry?

Price-To-Earnings vs Industry: BKR is expensive based on its Price-To-Earnings Ratio (93.2x) compared to the US Energy Services industry average (33.7x)

Price to Earnings Ratio vs Fair Ratio

What is BKR's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

BKR PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	93.2x
Fair PE Ratio	36.3x

Price-To-Earnings vs Fair Ratio: BKR is expensive based on its Price-To-Earnings Ratio (93.2x) compared to the estimated Fair Price-To-Earnings Ratio (36.3x).

Share Price vs Fair Value

What is the Fair Price of BKR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: BKR ($28.87) is trading below our estimate of fair value ($32.97)

Significantly Below Fair Value: BKR is trading below fair value, but not by a significant amount.

Price to Earnings Growth Ratio

PEG Ratio: BKR is poor value based on its PEG Ratio (2x)

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Future Growth

How is Baker Hughes forecast to perform in the next 1 to 3 years based on estimates from 23 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

46.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: BKR's forecast earnings growth (46.9% per year) is above the savings rate (1.9%).

Earnings vs Market: BKR's earnings (46.9% per year) are forecast to grow faster than the US market (13.7% per year).

High Growth Earnings: BKR's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: BKR's revenue (7.8% per year) is forecast to grow slower than the US market (8.3% per year).

High Growth Revenue: BKR's revenue (7.8% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: BKR's Return on Equity is forecast to be low in 3 years time (11.4%).

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Past Performance

How has Baker Hughes performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-35.3%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: BKR has a large one-off loss of $305.0M impacting its March 31 2022 financial results.

Growing Profit Margin: BKR became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: BKR has become profitable over the past 5 years, growing earnings by -35.3% per year.

Accelerating Growth: BKR has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: BKR has become profitable in the last year, making it difficult to compare its past year earnings growth to the Energy Services industry (-1.8%).

Return on Equity

High ROE: BKR's Return on Equity (2.2%) is considered low.

Discover strong past performing companies

Financial Health

How is Baker Hughes's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: BKR's short term assets ($14.7B) exceed its short term liabilities ($9.1B).

Long Term Liabilities: BKR's short term assets ($14.7B) exceed its long term liabilities ($9.4B).

Debt to Equity History and Analysis

Debt Level: BKR's net debt to equity ratio (14.9%) is considered satisfactory.

Reducing Debt: BKR's debt to equity ratio has increased from 2.9% to 40.6% over the past 5 years.

Debt Coverage: BKR's debt is well covered by operating cash flow (26.4%).

Interest Coverage: BKR's interest payments on its debt are well covered by EBIT (6.4x coverage).

Balance Sheet

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Dividend

What is Baker Hughes's current dividend yield, its reliability and sustainability?

Dividend Score

2/6

Dividend Score 2/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

2.49%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: BKR's dividend (2.49%) is higher than the bottom 25% of dividend payers in the US market (1.6%).

High Dividend: BKR's dividend (2.49%) is low compared to the top 25% of dividend payers in the US market (4.3%).

Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, BKR has been paying a dividend for less than 10 years.

Growing Dividend: BKR's dividend payments have increased, but the company has only paid a dividend for 5 years.

Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (206.2%), BKR's dividend payments are not well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (85.3%), BKR's dividend payments are covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

2.4yrs

Average management tenure

CEO

Lorenzo Simonelli (48 yo)

4.92yrs

Tenure

US$15,646,452

Compensation

Mr. Lorenzo Simonelli serves as Senior Non-Executive Director?? at Iveco Group N.V. since March 2022. He serves as Independent Non-Executive Director of Iveco Group N.V.He has been the Chief Executive Off...

CEO Compensation Analysis

Compensation vs Market: Lorenzo's total compensation ($USD15.65M) is about average for companies of similar size in the US market ($USD13.59M).

Compensation vs Earnings: Lorenzo's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: BKR's management team is considered experienced (2.4 years average tenure).

Board Members

Experienced Board: BKR's board of directors are considered experienced (4.9 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: BKR insiders have only sold shares in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/30 00:00
End of Day Share Price	2022/06/30 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31