In-Depth Analysis: Baker Hughes Versus Competitors In Energy Equipment & Services Industry

In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Baker Hughes BKR in relation to its major competitors in the Energy Equipment & Services industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate company's performance in the industry.

Baker Hughes Background

Baker Hughes is a global leader in oilfield services and oilfield equipment, with particularly strong presences in the artificial lift, specialty chemicals, and completions markets. It maintains modest exposure to offshore oil and gas production. The other half of its business focuses on industrial power generation, process solutions, and industrial asset management, with high exposure to the liquid natural gas market specifically, as well as broader industrials end markets.

By conducting an in-depth analysis of Baker Hughes, we can identify the following trends:

• A Price to Earnings ratio of 20.64 significantly below the industry average by 0.69x suggests undervaluation. This can make the stock appealing for those seeking growth.

• With a Price to Book ratio of 2.27, significantly falling below the industry average by 0.68x, it suggests undervaluation and the possibility of untapped growth prospects.

• The stock's relatively high Price to Sales ratio of 1.42, surpassing the industry average by 1.05x, may indicate an aspect of overvaluation in terms of sales performance.

• The company has a lower Return on Equity (ROE) of 3.41%, which is 3.51% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

• The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.08 Billion, which is 3.6x above the industry average, implying stronger profitability and robust cash flow generation.

• The gross profit of $1.34 Billion is 4.19x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• With a revenue growth of 23.69%, which surpasses the industry average of 11.17%, the company is demonstrating robust sales expansion and gaining market share.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

In terms of the Debt-to-Equity ratio, Baker Hughes stands in comparison with its top 4 peers, leading to the following comparisons:

• Baker Hughes is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.44.

• This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.

Key Takeaways

Baker Hughes has a low PE ratio compared to its peers in the Energy Equipment & Services industry, indicating that it may be undervalued. The low PB ratio suggests that the company's stock price is also undervalued relative to its book value. However, the high PS ratio implies that the stock may be overvalued based on its sales. The low ROE indicates that the company is not generating significant returns on its shareholders' equity. On the other hand, Baker Hughes has high EBITDA, gross profit, and revenue growth, indicating strong financial performance.

This article was generated by Benzinga's automated content engine and reviewed by an editor.