We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Baker Hughes (BKR) Up 1.6% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Baker Hughes (BKR - Free Report) . Shares have added about 1.6% 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 Misses Q2 Earnings Estimates
Baker Hughes reported second-quarter 2021 adjusted earnings of 10 cents per share, missing the Zacks Consensus Estimate of 17 cents. However, the bottom line improved drastically from year-ago period’s loss of 5 cents per share.
Revenues totaled $5,142 million, beating the Zacks Consensus Estimate of $4,927 million. The figure also increased from the year-ago quarter’s $4,736 million.
The lower-than-expected earnings were caused by a decline in cost productivity in Digital Solutions, and increased overall costs and expenses. The negatives were partially offset by higher volumes and excellent performance of the Turbomachinery & Process Solutions business.
The company believes that there will be recovery in oil demand and the global economy in second-half 2021. Both were hit badly by the coronavirus pandemic last year. The oilfield service firm also expects the industry to be on a footing for stronger recovery in 2022, as spending and activity levels are gradually gaining momentum despite COVID-related uncertainties. The cautious yet optimistic view from the company’s management can give an upward push to its stock price.
Segmental Performance
Revenues from the Oilfield Services (OFS) unit amounted to $2,358 million, down 2% from the year-ago figure of $2,411 million. However, operating income from the segment was $171 million, up from $46 million reported in second-quarter 2020 due to higher volumes. Sales in regions like Asia Pacific, Europe and Latin America increased in the second quarter.
Revenues from the Oilfield Equipment (OFE) unit totaled $637 million, down 8% from the prior-year quarter’s $696 million. The segment was affected by lower volumes in the company’s Subsea Drilling Systems business and Surface Pressure Control flow business’ dispositions. The segment reported a profit of $28 million against the year-ago loss of $14 million, thanks to increased cost productivity.
Revenues from the Turbomachinery & Process Solutions (TPS) unit increased to $1,628 million from $1,161 million a year ago owing to higher equipment volumes. Also, segmental income increased to $220 million from $149 million in the second quarter of 2020 owing to higher cost productivity and volumes. The positives were partially offset by increased equipment mix.
Revenues from the Digital Solutions (DS) segment amounted to $520 million, up 11% from $468 million in the year-ago quarter. Process & Pipeline Services, Waygate Technologies, and Bently Nevada businesses witnessed higher volumes that supported revenue growth. Operating profit at the segment, however, totaled $25 million, down 39% from the year-ago quarter’s $41 million. The segment was affected by a decline in cost productivity.
Costs and Expenses
The company recorded total costs and expenses of $4,948 million for the second quarter, up from the year-ago figure of $4,788 million due to higher cost of revenues and SG&A expenses.
Orders
Total orders from all business segments for second-quarter 2021 were $5,093 million, up 4% year over year due to higher order intakes from segments like Turbomachinery & Process Solutions as well as Digital Solutions.
Free Cash Flow
The company generated positive free cash flow of $385 million in the reported quarter compared with $63 million in the year-ago period.
Capex & Balance Sheet
Baker Hughes’ net capital expenditure for the second quarter totaled $121 million.
As of Jun 30, 2021, the company had cash and cash equivalents of $3,913 million, down from $4,382 million in the first quarter. At second quarter-end, it had a long-term debt of $6,722 million, down sequentially from $6,733 million, implying a debt to capitalization of 28%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 5.75% due to these changes.
VGM Scores
At this time, Baker Hughes has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Baker Hughes (BKR) Up 1.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Baker Hughes (BKR - Free Report) . Shares have added about 1.6% 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 Misses Q2 Earnings Estimates
Baker Hughes reported second-quarter 2021 adjusted earnings of 10 cents per share, missing the Zacks Consensus Estimate of 17 cents. However, the bottom line improved drastically from year-ago period’s loss of 5 cents per share.
Revenues totaled $5,142 million, beating the Zacks Consensus Estimate of $4,927 million. The figure also increased from the year-ago quarter’s $4,736 million.
The lower-than-expected earnings were caused by a decline in cost productivity in Digital Solutions, and increased overall costs and expenses. The negatives were partially offset by higher volumes and excellent performance of the Turbomachinery & Process Solutions business.
The company believes that there will be recovery in oil demand and the global economy in second-half 2021. Both were hit badly by the coronavirus pandemic last year. The oilfield service firm also expects the industry to be on a footing for stronger recovery in 2022, as spending and activity levels are gradually gaining momentum despite COVID-related uncertainties. The cautious yet optimistic view from the company’s management can give an upward push to its stock price.
Segmental Performance
Revenues from the Oilfield Services (OFS) unit amounted to $2,358 million, down 2% from the year-ago figure of $2,411 million. However, operating income from the segment was $171 million, up from $46 million reported in second-quarter 2020 due to higher volumes. Sales in regions like Asia Pacific, Europe and Latin America increased in the second quarter.
Revenues from the Oilfield Equipment (OFE) unit totaled $637 million, down 8% from the prior-year quarter’s $696 million. The segment was affected by lower volumes in the company’s Subsea Drilling Systems business and Surface Pressure Control flow business’ dispositions. The segment reported a profit of $28 million against the year-ago loss of $14 million, thanks to increased cost productivity.
Revenues from the Turbomachinery & Process Solutions (TPS) unit increased to $1,628 million from $1,161 million a year ago owing to higher equipment volumes. Also, segmental income increased to $220 million from $149 million in the second quarter of 2020 owing to higher cost productivity and volumes. The positives were partially offset by increased equipment mix.
Revenues from the Digital Solutions (DS) segment amounted to $520 million, up 11% from $468 million in the year-ago quarter. Process & Pipeline Services, Waygate Technologies, and Bently Nevada businesses witnessed higher volumes that supported revenue growth. Operating profit at the segment, however, totaled $25 million, down 39% from the year-ago quarter’s $41 million. The segment was affected by a decline in cost productivity.
Costs and Expenses
The company recorded total costs and expenses of $4,948 million for the second quarter, up from the year-ago figure of $4,788 million due to higher cost of revenues and SG&A expenses.
Orders
Total orders from all business segments for second-quarter 2021 were $5,093 million, up 4% year over year due to higher order intakes from segments like Turbomachinery & Process Solutions as well as Digital Solutions.
Free Cash Flow
The company generated positive free cash flow of $385 million in the reported quarter compared with $63 million in the year-ago period.
Capex & Balance Sheet
Baker Hughes’ net capital expenditure for the second quarter totaled $121 million.
As of Jun 30, 2021, the company had cash and cash equivalents of $3,913 million, down from $4,382 million in the first quarter. At second quarter-end, it had a long-term debt of $6,722 million, down sequentially from $6,733 million, implying a debt to capitalization of 28%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 5.75% due to these changes.
VGM Scores
At this time, Baker Hughes has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly 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.