Long-established in the Oil & Gas industry, Baker Hughes Co (BKR, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0%, juxtaposed with a three-month change of -4.43%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Baker Hughes Co.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 5/10
- Growth rank: 1/10
- GF Value rank: 3/10
- Momentum rank: 9/10
Based on the above method, GuruFocus assigned Baker Hughes Co the GF Score of 65 out of 100, which signals poor future outperformance potential.
Understanding Baker Hughes Co Business
Baker Hughes Co, with a market cap of $34.24 billion and sales of $24.58 billion, is a global leader in oilfield services and oilfield equipment. The company boasts strong presences in the artificial lift, specialty chemicals, and completions markets, with modest exposure to offshore oil and gas production. Half of its business is dedicated to industrial power generation, process solutions, and industrial asset management, with a significant focus on the liquid natural gas market and broader industrials end markets. With an operating margin of 10.25%, Baker Hughes Co's financials reflect its diversified operations and strategic market positions.
Profitability Breakdown
Baker Hughes Co's low Profitability rank can also raise warning signals. The company's Gross Margin has seen fluctuations over the past five years, with a notable decline in the most recent year: 2019: 18.59%; 2020: 15.45%; 2021: 19.75%; 2022: 20.80%; 2023: 17.14%. This trend underscores the company's struggles to convert its revenue into profits, which is a critical aspect for investors to consider.
Growth Prospects
A lack of significant growth is another area where Baker Hughes Co seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by an average of -20.6% per year over the past three years, which underperforms worse than 90% of 860 companies in the Oil & Gas industry. Stagnating revenues may pose concerns in a fast-evolving market, indicating potential challenges ahead for Baker Hughes Co.
Next Steps
Considering Baker Hughes Co's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While the company has a strong historical reputation and a diversified business model, the current financial indicators suggest that investors should proceed with caution. The low growth and profitability ranks, in particular, may hinder the company's ability to deliver the returns investors have come to expect from this industry stalwart.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
