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Baker Hughes (BKR) Misses Earnings & Revenue Estimates in Q4

Zacks Equity Research

Baker Hughes Company BKR has reported fourth-quarter 2019 adjusted earnings of 27 cents per share, which missed the Zacks Consensus Estimate of 31 cents primarily due to lower contributions from flexible pipe and surface pressure control businesses.

However, the bottom line improved marginally from the year-ago quarter’s adjusted profit of 26 cents, owing to strong growth in the oilfield services business in the Middle East, Latin America and the Asia Pacific.   

Revenues totaled $6,347 million, missing the Zacks Consensus Estimate of $6,491 million. However, the figure was higher than the year-ago quarter’s $6,264 million.

Baker Hughes Company Price, Consensus and EPS Surprise

 

Baker Hughes Company Price, Consensus and EPS Surprise

Baker Hughes Company price-consensus-eps-surprise-chart | Baker Hughes Company Quote

Segmental Performance

Revenues from the Oilfield Services unit amounted to $3,292 million, up 7% from the year-ago figure of $3,062 million. Operating income from the segment was $235 million, up from $224 million reported in fourth-quarter 2018. The upside was driven by strong growth in the Middle East, Latin America and the Asia Pacific.

Revenues from the Oilfield Equipment unit totaled $765 million, up 5% from the prior-year quarter’s $729 million. Notably, the segment reported a profit of $16 million, suggesting a significant improvement from the year-ago quarter’s $12 million. This can be attributed to increased contributions from Subsea Production Systems and Services businesses, offset partially by a decline in contributions from flexible pipe and surface pressure control businesses.

Revenues from the Turbomachinery & Process Solutions unit declined to $1,632 million from $1,782 million a year ago, owing to a decline in equipment and installation sales. However, segmental income increased to $305 million from $257 million in the fourth quarter of 2018, owing to higher cost productivity.

Revenues from the Digital Solutions segment amounted to $659 million, down 5% from $691 million in the year-ago quarter. Operating profit at the segment totaled $109 million, down 5% from the year-ago quarter’s $115 million. The segment was affected by lower contributions from Controls, and Pipeline & Process Solutions businesses.

Orders

Total orders from all business segments in fourth-quarter 2019 were $6,944 million, up 1% year over year, owing to growth in two of the four segments.

Free Cash Flow

The company generated free cash flow of $1,053 million in the reported quarter, improving from $876 million in the year-ago period.

Capex & Balance Sheet

Baker Hughes’ capital expenditure in the fourth quarter totaled $304 million.

As of Dec 31, 2019, the company had cash and cash equivalents of approximately $3,249 million, and a long-term debt of $6,301 million, representing a debt-to-capitalization ratio of 16.1%.

Zacks Rank & Stocks to Consider

Baker Hughes currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Ecopetrol SA EC, California Resources Corporation CRC and CNX Resources Corporation CNX. While Ecopetrol sports a Zacks Rank #1 (Strong Buy), California Resources and CNX Resources carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ecopetrol is likely to have witnessed earnings growth of 7% in 2019.

California Resources’ earnings beat the Zacks Consensus Estimate in three of the past four quarters.

CNX Resources’ earnings surpassed the Zacks Consensus Estimate in two of the prior four quarters. It has a positive earnings surprise of 34.8%, on average, for the trailing four quarters.

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Baker Hughes Company (BKR) : Free Stock Analysis Report
 
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