Understanding Baker Hughes's Position In Energy Equipment & Services Industry Compared To Competitors

Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. In this article, we will delve into an extensive industry comparison, evaluating Baker Hughes BKR in comparison to its major competitors within the Energy Equipment & Services industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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.

When closely examining Baker Hughes, the following trends emerge:

• The stock's Price to Earnings ratio of 18.7 is lower than the industry average by 0.16x, suggesting potential value in the eyes of market participants.

• Considering a Price to Book ratio of 2.06, which is well below the industry average by 0.69x, the stock may be undervalued based on its book value compared to its peers.

• With a relatively low Price to Sales ratio of 1.29, which is 0.98x the industry average, the stock might be considered undervalued based on sales performance.

• The company has a lower Return on Equity (ROE) of 3.41%, which is 2.74% 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 3.72x above the industry average, implying stronger profitability and robust cash flow generation.

• The company has higher gross profit of $1.34 Billion, which indicates 4.47x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company is experiencing remarkable revenue growth, with a rate of 23.69%, outperforming the industry average of 12.08%.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.

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 assessing Baker Hughes against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:

• 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

Baker Hughes has a low PE ratio, indicating that its stock price is relatively low compared to its earnings. The low PB ratio suggests that the company's stock is undervalued based on its book value. Similarly, the low PS ratio indicates that the stock is trading at a lower price compared to its sales. On the other hand, Baker Hughes has high ROE, EBITDA, gross profit, and revenue growth, indicating strong financial performance compared to its peers in the Energy Equipment & Services industry.

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