Market Analysis: Baker Hughes And Competitors In Energy Equipment & Services Industry

In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Baker Hughes BKR in relation to its major competitors in the Energy Equipment & Services industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight 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 carefully studying Baker Hughes, we can deduce the following trends:

• A Price to Earnings ratio of 20.34 significantly below the industry average by 0.7x suggests undervaluation. This can make the stock appealing for those seeking growth.

• Considering a Price to Book ratio of 2.24, which is well below the industry average by 0.69x, the stock may be undervalued based on its book value compared to its peers.

• The Price to Sales ratio of 1.4, which is 1.05x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The company has a lower Return on Equity (ROE) of 3.41%, which is 3.53% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

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

• The company has higher gross profit of $1.34 Billion, which indicates 4.19x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 23.69% exceeds the industry average of 11.7%, indicating strong sales performance and market outperformance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative 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.

When comparing Baker Hughes with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:

• Among its top 4 peers, Baker Hughes has a stronger financial position with a lower debt-to-equity ratio of 0.44.

• This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.

Key Takeaways

The valuation analysis for Baker Hughes in the Energy Equipment & Services industry indicates that the company has a low PE ratio, suggesting that its stock price is relatively low compared to its earnings. The low PB ratio indicates that the company's stock is undervalued based on its book value. The high PS ratio suggests that the company's stock price is relatively high compared to its revenue. The low ROE indicates that the company's profitability is lower compared to its peers. The high EBITDA, gross profit, and revenue growth indicate strong financial performance compared to its industry peers.

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