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Is a Beat in Store for Baker Hughes (BHGE) in Q4 Earnings?

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Baker Hughes, a GE company  is scheduled to report fourth-quarter 2018 results on Jan 31, before the opening bell.

The oilfield services player beat the Zacks Consensus Estimate in two of the last four quarters, with a positive average surprise of 6.1%. The Zacks Consensus Estimate for fourth-quarter 2018 earnings per share is pegged at 27 cents, up 80% from the year-ago quarter.

Let’s see how things are shaping up for the upcoming quarterly release.

Why a Likely Positive Surprise?

Our proven model shows that Baker Hughes is likely to beat earnings estimates in the to-be-reported quarter because it has the right combination of two key ingredients.    

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.68%. This is a very meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Baker Hughes carries a Zacks Rank #3 (Hold), which when combined with a +0.68% ESP, makes us confident about an earnings beat.

Please note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. The Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

What’s Driving the Better-Than-Expected Performance?

The Zacks Consensus Estimate for fourth-quarter operating income from the Digital Solutions unit is pegged at $120 million, higher than the last reported quarter’s $106 million and the year-ago level of $107 million.

The Oilfield Equipment segment is expected to come up with an operating income of around $15.2 million compared with the year-ago period’s $29 million and $6 million recorded in third-quarter 2018.

The Zacks Consensus Estimate for fourth-quarter operating income from the Oilfield Services segment is pegged at $249 million, higher than the last reported quarter’s $231 million and the year-ago figure of $113 million.

The Zacks Consensus Estimate for operating income from the Turbomachinery & Process Solutions is pegged at $211 million, up from $132 million in the third quarter of 2018 and $146 million in the year-ago period.

Total orders from all its segments for the fourth quarter is expected at $6.5 billion, higher than the year-ago figure of $5.8 billion and last reported-quarter’s $5.7 billion. 

Other Stocks to Consider

Here are some other companies from the energy sector, which, according to our model, also have the right combination of elements to post an earnings beat in the to-be-reported quarter:

Dallas, TX-based EnLink Midstream Partners, LP has a Zacks Rank #2 and an Earnings ESP of +10.00%. The company is slated to report fourth-quarter earnings on Feb 19. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pittsburgh, PA-based EQT Corporation (EQT - Free Report) holds a Zacks Rank #3 and has an Earnings ESP of +1.48%. The company is scheduled to report fourth-quarter earnings on Feb 21.

Oklahoma City, OK-based Chaparral Energy, Inc. carries a Zacks Rank #3 and has an Earnings ESP of +11.63%. The company is anticipated to report quarterly results on Feb 12.

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