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Why Is Baker Hughes (BKR) Down 2.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for Baker Hughes (BKR - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Baker Hughes due for a breakout? 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 Q4 Earnings Top Estimates, Revenues Miss
Baker Hughes Company reported fourth-quarter 2023 adjusted earnings of 51 cents per share, which beat the Zacks Consensus Estimate of 47 cents. The bottom line also improved from the year-ago quarter’s level of 38 cents.
Total quarterly revenues of $6,835 million missed the Zacks Consensus Estimate of $6,909 million. The top line, however, increased from the year-ago quarter’s level of $5,905 million.
Strong quarterly earnings were primarily driven by higher contributions from the Oilfield Services and Equipment, and the Industrial & Energy Technology business units.
Segmental Performance
Baker Hughes was reorganized from four to two operating segments — Oilfield Services and Equipment, and Industrial & Energy Technology. The segments became operational from Oct 1, 2022.
Revenues from the Oilfield Services and Equipment unit amounted to $3,956 million, up 11% from the year-ago quarter’s figure of $3,579 million. Our estimate for revenues from the same unit was pegged at $3,933.4 million.
Operating income from the segment totaled $492 million, up 18% from $416 million reported in fourth-quarter 2022, backed by higher volumes.
Revenues from the Industrial & Energy Technology unit amounted to $2,879 million, up 24% from the year-ago quarter’s level of $2,325 million. Our estimate for revenues from the same unit was pegged at $2,971.3 million.
Operating income from the segment totaled $412 million, up 9% from the year-ago quarter’s level of $377 million, due to higher volumes and pricing.
Costs and Expenses
Baker Hughes recorded total costs and expenses of $6,183 million in the fourth quarter, up from the year-ago quarter’s figure of $5,242 million. The reported number is also above our projection of $6,148.4 million.
Orders
Orders from all business segments amounted to $6,904 million, down 14% year over year. We expected the figure to be $7,605.5 million.
The underperformance resulted from lower order intakes from the Oilfield Services and Equipment, and the Subsea & Surface Pressure Systems units.
Free Cash Flow
Baker Hughes generated a free cash flow of $633 million in the reported quarter compared with $657 million in the year-ago period.
Capex & Balance Sheet
BKR’s net capital expenditure in the fourth quarter was $298 million.
As of Dec 31, 2023, it had cash and cash equivalents of $2,646 million. The company had a long-term debt of $5,872 million at the end of the reported quarter, marking a debt-to-capitalization of 27.6%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 9.2% due to these changes.
VGM Scores
At this time, Baker Hughes has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second 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.
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Why Is Baker Hughes (BKR) Down 2.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Baker Hughes (BKR - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Baker Hughes due for a breakout? 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 Q4 Earnings Top Estimates, Revenues Miss
Baker Hughes Company reported fourth-quarter 2023 adjusted earnings of 51 cents per share, which beat the Zacks Consensus Estimate of 47 cents. The bottom line also improved from the year-ago quarter’s level of 38 cents.
Total quarterly revenues of $6,835 million missed the Zacks Consensus Estimate of $6,909 million. The top line, however, increased from the year-ago quarter’s level of $5,905 million.
Strong quarterly earnings were primarily driven by higher contributions from the Oilfield Services and Equipment, and the Industrial & Energy Technology business units.
Segmental Performance
Baker Hughes was reorganized from four to two operating segments — Oilfield Services and Equipment, and Industrial & Energy Technology. The segments became operational from Oct 1, 2022.
Revenues from the Oilfield Services and Equipment unit amounted to $3,956 million, up 11% from the year-ago quarter’s figure of $3,579 million. Our estimate for revenues from the same unit was pegged at $3,933.4 million.
Operating income from the segment totaled $492 million, up 18% from $416 million reported in fourth-quarter 2022, backed by higher volumes.
Revenues from the Industrial & Energy Technology unit amounted to $2,879 million, up 24% from the year-ago quarter’s level of $2,325 million. Our estimate for revenues from the same unit was pegged at $2,971.3 million.
Operating income from the segment totaled $412 million, up 9% from the year-ago quarter’s level of $377 million, due to higher volumes and pricing.
Costs and Expenses
Baker Hughes recorded total costs and expenses of $6,183 million in the fourth quarter, up from the year-ago quarter’s figure of $5,242 million. The reported number is also above our projection of $6,148.4 million.
Orders
Orders from all business segments amounted to $6,904 million, down 14% year over year. We expected the figure to be $7,605.5 million.
The underperformance resulted from lower order intakes from the Oilfield Services and Equipment, and the Subsea & Surface Pressure Systems units.
Free Cash Flow
Baker Hughes generated a free cash flow of $633 million in the reported quarter compared with $657 million in the year-ago period.
Capex & Balance Sheet
BKR’s net capital expenditure in the fourth quarter was $298 million.
As of Dec 31, 2023, it had cash and cash equivalents of $2,646 million. The company had a long-term debt of $5,872 million at the end of the reported quarter, marking a debt-to-capitalization of 27.6%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 9.2% due to these changes.
VGM Scores
At this time, Baker Hughes has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second 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.