We see no reason to change our $39 fair value estimate for no-moat-rated Baker Hughes. The company’s first-quarter earnings results were largely in line with our expectations. Revenue of roughly $6.4 billion rose 12% year on year driven by Baker Hughes’ industrial and energy technology, or IET, business. While IET represents a smaller portion of Baker’s sales mix, we consider it the better business.
Baker Hughes will realize a more profitable product mix as gas technology equipment orders yield higher service orders over time.
Exploration and production firms’ persistently stringent capital budgeting will prevent Baker Hughes from maximizing its potential benefits from high oil and gas demand.
|
Metric
|
BKR
|
SLB
|
HAL
|
|---|---|---|---|
Price/Earnings (Normalized) | 19.03 | 15.90 | 12.14 |
Price/Book Value | 2.16 | 3.41 | 3.54 |
Price/Sales | 1.29 | 2.09 | 1.51 |
Price/Cash Flow | 12.15 | 10.16 | — |
|
Metric
|
BKR
|
SLB
|
HAL
|
|---|---|---|---|
Quick Ratio | 0.73 | 0.88 | 1.30 |
Current Ratio | 1.25 | 1.32 | 2.12 |
Interest Coverage | 14.14 | 11.30 | 5.98 |
|
Metric
|
BKR
|
SLB
|
HAL
|
|---|---|---|---|
Return on Assets (Normalized) | 4.54% | 9.54% | 11.75% |
Return on Equity (Normalized) | 10.83% | 22.91% | 31.52% |
Return on Invested Capital (Normalized) | 8.24% | 14.48% | 18.09% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
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