A month has gone by since the last earnings report for Baker Hughes Incorporated . Shares have lost about 4.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Baker Hughes Incurs Narrower-Than-Expected Loss in Q1
Baker Hughes incurred narrower-than-expected loss in first-quarter 2017. The company’s North America onshore business improved, mainly in its well construction product lines.
Loss per share from continuing operations (excluding special items) came in at $0.04, much narrower than the Zacks Consensus Estimate of a loss of $0.21 as well as the year-ago loss of $0.44.
Revenues of $2,262 million came in below the Zacks Consensus Estimate of $2,278 million. The top line also deteriorated from the year-ago level of $2,670 million. Lower works in West Africa (mainly Nigeria) following labor union strikes along with significant fall in activities in the Gulf of Mexico led to the underperformances.
First-Quarter Segment Performance
The company operates through five business segments – North America, Latin America, Europe/Africa/Russia Caspian, Middle East/Asia Pacific and Industrial Services.
Of Baker Hughes' total quarterly revenue, North America, Europe/Africa/Russia/Caspian, Middle East/Asia-Pacific and Latin America accounted for 31.5%, 20.4%, 29.2% and 8.9%, respectively. The remainder was generated by the Industrial Services segment.
North America: The company generated revenues of $712 million from this continent compared with $819 million in the year-ago quarter. The underperformance stemmed from deconsolidation of the North America onshore pressure pumping business and a steep decline in activity in the Gulf of Mexico. However, the downside was partially negated by an increase in the U.S. onshore business and higher seasonal activity in Canada.
This segment incurred adjusted operating loss before tax of $23 million, narrower than a loss of $225 million in the year-ago period. This may be attributed to the absence of a benefit related to the deconsolidation of the North America onshore pressure pumping business and inventory write-off in the prior quarter.
Latin America: The business unit recorded revenues of $201 million as against $277 million in the January–March quarter of 2016. The decrease in revenues may be attributed to decline in activity across the region and absence of year-end product sales.
The segment reported profit before tax of $84 million, which compared favorably with adjusted operating loss before tax of $66 million in the prior-year quarter.
Europe/Africa/Russia Caspian: The company generated $461 million in revenues as against $611 million in first-quarter 2016. Seasonal activity declines, mainly in the Russia-Caspian area, and lower activity in West Africa (predominantly Nigeria) as a result of labor union strikes, were responsible for the plunge in top line.
Operating profit from this segment was $1 million, which compared favorably with a loss of $19 million in the last quarter of 2016.
Middle East/Asia Pacific: Baker Hughes recorded revenues of $661 million as against $718 in the prior-year quarter.
The unit’s profit of $72 million was considerably higher than $49 million in the January–March quarter of 2016.
Expenses
Depreciation and amortization expenses were $218 million, down 11% sequentially and 38.4% year over year.
Liquidity
At the end of the first quarter, Baker Hughes had $4,222 million in cash and cash equivalents, while long-term debt was $2,884 million. In the reported quarter, capital expenditures increased $1 million from first-quarter to $87 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been nine revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 394.3% due to these changes.
VGM Scores
At this time, Baker Hughes' stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Baker Hughes (BHI) Down 4.3% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Baker Hughes Incorporated . Shares have lost about 4.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Baker Hughes Incurs Narrower-Than-Expected Loss in Q1
Baker Hughes incurred narrower-than-expected loss in first-quarter 2017. The company’s North America onshore business improved, mainly in its well construction product lines.
Loss per share from continuing operations (excluding special items) came in at $0.04, much narrower than the Zacks Consensus Estimate of a loss of $0.21 as well as the year-ago loss of $0.44.
Revenues of $2,262 million came in below the Zacks Consensus Estimate of $2,278 million. The top line also deteriorated from the year-ago level of $2,670 million. Lower works in West Africa (mainly Nigeria) following labor union strikes along with significant fall in activities in the Gulf of Mexico led to the underperformances.
First-Quarter Segment Performance
The company operates through five business segments – North America, Latin America, Europe/Africa/Russia Caspian, Middle East/Asia Pacific and Industrial Services.
Of Baker Hughes' total quarterly revenue, North America, Europe/Africa/Russia/Caspian, Middle East/Asia-Pacific and Latin America accounted for 31.5%, 20.4%, 29.2% and 8.9%, respectively. The remainder was generated by the Industrial Services segment.
North America: The company generated revenues of $712 million from this continent compared with $819 million in the year-ago quarter. The underperformance stemmed from deconsolidation of the North America onshore pressure pumping business and a steep decline in activity in the Gulf of Mexico. However, the downside was partially negated by an increase in the U.S. onshore business and higher seasonal activity in Canada.
This segment incurred adjusted operating loss before tax of $23 million, narrower than a loss of $225 million in the year-ago period. This may be attributed to the absence of a benefit related to the deconsolidation of the North America onshore pressure pumping business and inventory write-off in the prior quarter.
Latin America: The business unit recorded revenues of $201 million as against $277 million in the January–March quarter of 2016. The decrease in revenues may be attributed to decline in activity across the region and absence of year-end product sales.
The segment reported profit before tax of $84 million, which compared favorably with adjusted operating loss before tax of $66 million in the prior-year quarter.
Europe/Africa/Russia Caspian: The company generated $461 million in revenues as against $611 million in first-quarter 2016. Seasonal activity declines, mainly in the Russia-Caspian area, and lower activity in West Africa (predominantly Nigeria) as a result of labor union strikes, were responsible for the plunge in top line.
Operating profit from this segment was $1 million, which compared favorably with a loss of $19 million in the last quarter of 2016.
Middle East/Asia Pacific: Baker Hughes recorded revenues of $661 million as against $718 in the prior-year quarter.
The unit’s profit of $72 million was considerably higher than $49 million in the January–March quarter of 2016.
Expenses
Depreciation and amortization expenses were $218 million, down 11% sequentially and 38.4% year over year.
Liquidity
At the end of the first quarter, Baker Hughes had $4,222 million in cash and cash equivalents, while long-term debt was $2,884 million. In the reported quarter, capital expenditures increased $1 million from first-quarter to $87 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been nine revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 394.3% due to these changes.
Baker Hughes Incorporated Price and Consensus
Baker Hughes Incorporated Price and Consensus | Baker Hughes Incorporated Quote
VGM Scores
At this time, Baker Hughes' stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.