Baker Hughes Company (BKR) | Investment Case

1. Company Snapshot

1.a. Company Description

Baker Hughes Company provides a portfolio of technologies and services to energy and industrial value chain worldwide.It operates through four segments: Oilfield Services (OFS), Oilfield Equipment (OFE), Turbomachinery & Process Solutions (TPS), and Digital Solutions (DS).The OFS segment offers exploration, drilling, wireline, evaluation, completion, production, and intervention services; and drilling and completions fluids, wireline services, downhole completion tools and systems, wellbore intervention tools and services, pressure pumping systems, oilfield and industrial chemicals, and artificial lift technologies for oil and natural gas, and oilfield service companies.

The OFE segment provides subsea and surface wellheads, pressure control and production systems and services, flexible pipe systems for offshore and onshore applications, and life-of-field solutions, including well intervention and decommissioning solutions; and services related to onshore and offshore drilling and production operations.The TPS segment provides equipment and related services for mechanical-drive, compression, and power-generation applications across the oil and gas industry.Its product portfolio includes drivers, compressors, and turnkey solutions; and pumps, valves, and compressed natural gas and small-scale liquefied natural gas solutions.

This segment serves upstream, midstream, downstream, onshore, offshore, and industrial customers.The DS segment provides sensor-based process measurements, machine health and condition monitoring, asset strategy and management, control systems, as well as non-destructive testing and inspection, and pipeline integrity solutions.The company was formerly known as Baker Hughes, a GE company and changed its name to Baker Hughes Company in October 2019.

Baker Hughes Company is based in Houston, Texas.

Show Full description

1.b. Last Insights on BKR

Baker Hughes' recent performance was positively driven by its Q3 earnings beat, with revenue of $7.01 billion and earnings of $0.68 per share, exceeding expectations. The company's Industrial & Energy Technology segment showed robust growth. Additionally, activist investor Ananym Capital's proposal to spin off its Oilfield Services & Equipment business could unlock substantial shareholder value, with a potential 51% immediate upside. Allianz SE also increased its stake in the company by 35.8%.

1.c. Company Highlights

Last Price	50.61
Change Percentage	0.24%
Open	50.47
Previous Close	50.49
Market Cap ( Millions)	49941
Volume	6356191
Year High	51.12
Year Low	33.6
M A 50	48.07
M A 200	42.94

FCF Yield	4.18%
Dividend Yield	1.82%
ROE	16.57%
Debt / Equity	33.35%
Net Debt / EBIDTA	74.58%
Price To Book	2.75
Price Earnings Ratio	17.26
Price To FCF	23.9
Price To sales	1.8
EV / EBITDA	11.82

2. Baker Hughes Beats Expectations with Strong Q3 2025 Earnings

Baker Hughes reported a robust financial performance in Q3 2025, with adjusted EBITDA rising to $1.24 billion, above the midpoint of their guidance range. The company's consolidated adjusted EBITDA margins increased by 20 basis points year-over-year to 17.7%. Earnings per share (EPS) came in at $0.68, beating analyst estimates of $0.616. Revenue growth was driven by the Industrial and Energy Technology (IET) segment, which continues to build momentum with $4.1 billion in orders during the quarter.

Publication Date: Oct -25

                                    📋 Highlights
                                    Adjusted EBITDA Surge:
                                                Rose to $1.24 billion, exceeding guidance midpoint, driven by U.S. land performance and business system deployment, with margins up 20 bps to 17.7% YoY.
IET Segment Momentum:
                                                Secured $4.1 billion in orders (including $800M LNG equipment) and a record $32.1 billion backlog, 3% higher sequentially, reinforcing growth visibility.
Chart Acquisition Strategy:
                                                Expected to close in mid-2026, targeting $325 million in cost synergies and enhancing technology offerings, with net debt/EBITDA to reach 1–1.5x within 24 months.
2025 Guidance Raised:
                                                Total adjusted EBITDA midpoint raised to $4.74 billion; IET revenue and EBITDA guidance increased to $13.05 billion and $2.4 billion, respectively.
2028 Margin Target:
                                                Aiming for 20% EBITDA margins by 2028 (250 bps improvement), supported by AI efficiency, portfolio optimization, and $40 billion in IET orders over Horizon Two.

                                

Segment Performance

The IET segment achieved a record backlog of $32.1 billion, up 3% sequentially, driven by LNG equipment orders, including $800 million for Trains 3 and 4 of Sempra's Port Arthur Phase 2 and Train 4 of NextDecade's Rio Grande LNG. The company's technology portfolio remains a core differentiator, with best-in-class liquefaction solutions and a broad selection of drivers. As Lorenzo Simonelli noted, "We're aiming for 20% EBITDA margins by '28, which implies 250 basis points of margin improvement over the next three years."

Outlook and Guidance

Baker Hughes raised the midpoint of total company adjusted EBITDA to $4.74 billion, with IET revenue guidance increased to $13.05 billion and EBITDA to $2.4 billion. The company expects to continue delivering profitable growth alongside margin expansion, with a record backlog and strong margin improvement. For 2026, IET is expected to continue EBITDA growth, even with the PSI divestiture taken into account.

Valuation and Metrics

With a P/E Ratio of 16.13 and an EV/EBITDA of 11.09, Baker Hughes' valuation appears reasonable considering its growth prospects. The company's ROE of 16.53% and ROIC of 11.28% indicate strong profitability. The Net Debt / EBITDA ratio of 0.75 is relatively low, indicating a healthy balance sheet. The Dividend Yield of 1.9% provides a stable return for shareholders.

Chart Acquisition and Integration

The acquisition of Chart is expected to enrich Baker Hughes' differentiated technology offerings and enhance the value delivered to customers. Integration planning has commenced, with a focus on harmonizing systems, supply chains, and commercial and operational processes. The company expects to realize $325 million in anticipated cost synergies and is confident in the strategic and industrial logic of the acquisition.

3. NewsRoom

Fisher Asset Management LLC Decreases Holdings in Baker Hughes Company $BKR

Dec -03

Source: defenseworld.net

Josh Brown's best stocks in the market: Morgan Stanley, Baker Hughes and Ciena

Dec -02

Source: youtube.com

Baker Hughes Company (NASDAQ:BKR) Receives Average Recommendation of “Moderate Buy” from Analysts

Nov -27

Source: defenseworld.net

US drillers cut oil and gas rigs for first time in four weeks, Baker Hughes says

Nov -26

Source: reuters.com

Baker Hughes Eyes Buy Point; Watch These Real Estate, Audio Stocks In Bases

Nov -24

Source: investors.com

Activist Ananym Capital sees upside if Baker Hughes spins off its oilfield services business

Nov -22

Source: cnbc.com

American Century Mid Cap Value Fund Q3 2025 Contributors/Detractors And Notable Trades

Nov -20

Source: seekingalpha.com

Dynamis Power Solutions Awards Baker Hughes With Significant Order for Gas Turbine Technology to Support Mobile Power for Oil & Gas Applications

Nov -20

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.78%)

6. Segments

Oilfield Services & Equipment

Expected Growth: 4.0%

The Oilfield Services & Equipment segment growth of 4.0% is driven by increased drilling activity, higher demand for energy, and rising investments in exploration and production. Additionally, Baker Hughes' technological advancements and improved operational efficiency contribute to the growth, as the company benefits from its diversified portfolio and expanding presence in key markets.

Industrial & Energy Technology

Expected Growth: 3.5%

The Industrial & Energy Technology segment growth of 3.5% is driven by increasing demand for digital transformation, energy efficiency, and sustainability solutions. Key drivers include investments in renewable energy, modernization of existing infrastructure, and adoption of Industrial Internet of Things (IIoT) technologies. Additionally, Baker Hughes' focus on innovative solutions such as hydrogen fuel cells and carbon capture technology contributes to growth.

7. Detailed Products

Drilling Services

Provides drilling services and equipment to optimize wellbore placement and improve drilling efficiency

Evaluation and Intervention Services

Offers evaluation and intervention services to optimize well performance and extend well life

Completion and Production Services

Provides completion and production services to optimize well production and extend well life

Digital Solutions

Offers digital solutions to optimize oil and gas operations, including data analytics and artificial intelligence

Oilfield Equipment

Manufactures and supplies oilfield equipment, including pumps, valves, and compressors

Turbomachinery and Process Solutions

Provides turbomachinery and process solutions for oil and gas, power generation, and industrial applications

Chemicals and Materials

Manufactures and supplies chemicals and materials for oil and gas operations, including drilling and completion fluids

8. Baker Hughes Company's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Baker Hughes Company is medium due to the presence of alternative products and services in the oil and gas industry.

Bargaining Power Of Customers

The bargaining power of customers for Baker Hughes Company is high due to the concentration of large oil and gas companies that have significant purchasing power.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Baker Hughes Company is low due to the company's large scale of operations and diversified supply chain.

Threat Of New Entrants

The threat of new entrants for Baker Hughes Company is low due to the high barriers to entry in the oil and gas industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Baker Hughes Company is high due to the competitive nature of the oil and gas industry, with many established players competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	28.15%
Debt Cost	4.83%
Equity Weight	71.85%
Equity Cost	11.12%
WACC	9.35%
Leverage	39.18%

11. Quality Control: Baker Hughes Company passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Cheniere Energy Partners

A-Score: 7.5/10

Value: 7.2

Growth: 6.8

Quality: 7.1

Yield: 10.0

Momentum: 6.5

Volatility: 7.7

1-Year Total Return ->

Energy Transfer

A-Score: 6.7/10

Value: 7.2

Growth: 3.6

Quality: 4.1

Yield: 10.0

Momentum: 6.0

Volatility: 9.3

1-Year Total Return ->

Williams

A-Score: 6.2/10

Value: 2.0

Growth: 4.6

Quality: 5.6

Yield: 8.0

Momentum: 8.0

Volatility: 9.0

1-Year Total Return ->

Baker Hughes

A-Score: 5.9/10

Value: 4.8

Growth: 4.3

Quality: 6.2

Yield: 5.0

Momentum: 8.0

Volatility: 7.0

1-Year Total Return ->

Schlumberger

A-Score: 5.0/10

Value: 5.5

Growth: 4.9

Quality: 6.0

Yield: 5.0

Momentum: 2.0

Volatility: 6.7

1-Year Total Return ->

Halliburton

A-Score: 4.5/10

Value: 5.5

Growth: 5.2

Quality: 4.9

Yield: 4.0

Momentum: 2.0

Volatility: 5.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

9.84%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.35%

Baker Hughes Company - US05722G1004

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on BKR

1.c. Company Highlights

Less Volatile

Average Growth

Fairly Valued

Earnings Beats

Revenues Beats

Expensive

Lower Growth

Medium Volatility

Revenues Miss

Strong Momentum

Average Quality

Stable Momentum

2. Baker Hughes Beats Expectations with Strong Q3 2025 Earnings

Segment Performance

Outlook and Guidance

Valuation and Metrics

Chart Acquisition and Integration

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.78%)

6. Segments

Oilfield Services & Equipment

Expected Growth: 4.0%

Industrial & Energy Technology

Expected Growth: 3.5%

7. Detailed Products

Drilling Services

Evaluation and Intervention Services

Completion and Production Services

Digital Solutions

Oilfield Equipment

Turbomachinery and Process Solutions

Chemicals and Materials

8. Baker Hughes Company's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Baker Hughes Company passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

50.61$

Current Price

50.61$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA