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Baker Hughes (BKR) Up 28.1% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Baker Hughes (BKR - Free Report) . Shares have added about 28.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Baker Hughes due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Baker Hughes Company reported first-quarter 2021 adjusted earnings of 12 cents per share, beating the Zacks Consensus Estimate and improving from the year-ago profit by a penny. The strong quarterly earnings were owing to higher contributions from the Turbomachinery & Process Solutions business unit and increased cost productivity.
Revenues totaled $4,782 million, missing the Zacks Consensus Estimate of $4,797 million. Moreover, the figure was lower than the year-ago quarter’s $5,425 million.
Segmental Performance
Revenues from the Oilfield Services (OFS) unit amounted to $2,200 million, down 30% from the year-ago $3,139 million. The downside was due to lower revenues from Middle East and Europe. Operating income from the segment was $143 million, down from $206 million reported in first-quarter 2020.
Revenues from the Oilfield Equipment (OFE) unit totaled $628 million, down 12% from the prior-year quarter’s $712 million. The segment was affected by lower volumes in the company’s Subsea Drilling Systems business and Subsea Services. Notably, the segment reported a profit of $4 million against the year-ago loss of $8 million, thanks to increased cost productivity.
Revenues from the Turbomachinery & Process Solutions (TPS) unit increased to $1,485 million from $1,085 million a year ago owing to higher equipment volumes. Moreover, segmental income increased to $207 million from $134 million in the first quarter of 2020 owing to higher productivity and volumes.
Revenues from the Digital Solutions (DS) segment amounted to $470 million, down 4% from $489 million in the year-ago quarter. Operating profit at the segment totaled $24 million, down 17% from the year-ago quarter’s $29 million. The segment was affected by a decline in volumes from Process & Pipeline Services and Nexus Controls.
Costs and Expenses
The company recorded total costs and expenses of $4,618 million for the first quarter, down from the year-ago figure of $21,484 million.
Orders
Total orders from all business segments for first-quarter 2021 were $4,541 million, down 18% year over year due to lower order intakes from segments like Oilfield Services and Oilfield Equipment.
Free Cash Flow
The company generated positive free cash flow of $498 million in the reported quarter compared with $152 million in the year-ago period.
Capex & Balance Sheet
Baker Hughes’ net capital expenditure for the first quarter totaled $180 million.
As of Mar 31, 2021, the company had cash and cash equivalents of $4,382 million. At first quarter-end, it had a long-term debt of $6,733 million, implying a debt to capitalization of 30.4%.
Outlook
The company believes that there will be recovery in oil demand and global economy in 2021 that has been hit badly by the coronavirus pandemic. The oilfield service firm also expects the industry to be in a footing for stronger recovery in 2022 as spending and activity levels are gradually gaining momentum.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 17.48% due to these changes.
VGM Scores
At this time, Baker Hughes has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Baker Hughes has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Baker Hughes (BKR) Up 28.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Baker Hughes (BKR - Free Report) . Shares have added about 28.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Baker Hughes due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Baker Hughes Q1 Earnings Beat, Misses Revenue Estimates
Baker Hughes Company reported first-quarter 2021 adjusted earnings of 12 cents per share, beating the Zacks Consensus Estimate and improving from the year-ago profit by a penny. The strong quarterly earnings were owing to higher contributions from the Turbomachinery & Process Solutions business unit and increased cost productivity.
Revenues totaled $4,782 million, missing the Zacks Consensus Estimate of $4,797 million. Moreover, the figure was lower than the year-ago quarter’s $5,425 million.
Segmental Performance
Revenues from the Oilfield Services (OFS) unit amounted to $2,200 million, down 30% from the year-ago $3,139 million. The downside was due to lower revenues from Middle East and Europe. Operating income from the segment was $143 million, down from $206 million reported in first-quarter 2020.
Revenues from the Oilfield Equipment (OFE) unit totaled $628 million, down 12% from the prior-year quarter’s $712 million. The segment was affected by lower volumes in the company’s Subsea Drilling Systems business and Subsea Services. Notably, the segment reported a profit of $4 million against the year-ago loss of $8 million, thanks to increased cost productivity.
Revenues from the Turbomachinery & Process Solutions (TPS) unit increased to $1,485 million from $1,085 million a year ago owing to higher equipment volumes. Moreover, segmental income increased to $207 million from $134 million in the first quarter of 2020 owing to higher productivity and volumes.
Revenues from the Digital Solutions (DS) segment amounted to $470 million, down 4% from $489 million in the year-ago quarter. Operating profit at the segment totaled $24 million, down 17% from the year-ago quarter’s $29 million. The segment was affected by a decline in volumes from Process & Pipeline Services and Nexus Controls.
Costs and Expenses
The company recorded total costs and expenses of $4,618 million for the first quarter, down from the year-ago figure of $21,484 million.
Orders
Total orders from all business segments for first-quarter 2021 were $4,541 million, down 18% year over year due to lower order intakes from segments like Oilfield Services and Oilfield Equipment.
Free Cash Flow
The company generated positive free cash flow of $498 million in the reported quarter compared with $152 million in the year-ago period.
Capex & Balance Sheet
Baker Hughes’ net capital expenditure for the first quarter totaled $180 million.
As of Mar 31, 2021, the company had cash and cash equivalents of $4,382 million. At first quarter-end, it had a long-term debt of $6,733 million, implying a debt to capitalization of 30.4%.
Outlook
The company believes that there will be recovery in oil demand and global economy in 2021 that has been hit badly by the coronavirus pandemic. The oilfield service firm also expects the industry to be in a footing for stronger recovery in 2022 as spending and activity levels are gradually gaining momentum.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 17.48% due to these changes.
VGM Scores
At this time, Baker Hughes has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Baker Hughes has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.