Baker Hughes Company BKR reported third-quarter 2024 adjusted earnings of 67 cents per share, which beat the Zacks Consensus Estimate of 60 cents. The bottom line also improved from the year-ago level of 42 cents.

Total quarterly revenues of $6,908 million missed the Zacks Consensus Estimate of $7,193 million. However, the top line increased from the year-ago quarter’s $6,641 million.

The strong quarterly earnings were primarily driven by higher operational performance across both segments and improving EBITDA margins, which reached 17.5%, the highest since the company's formation.

Baker Hughes Company Price, Consensus and EPS Surprise

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

Segmental Performance

BKR was reorganized from four to two operating segments — Oilfield Services and Equipment, and Industrial & Energy Technology. The segments became operational from Oct. 1, 2022.

Revenues from the Oilfield Services and Equipment unit amounted to $3,963 million, up from the year-ago figure of $3,951 million. The reported figure was below our estimate of $4,138 million.

Operating income from the segment totaled $547 million, up 18% from $465 million reported in the third quarter of 2023. This growth was supported by favorable pricing and productivity, partially offset by a lower volume.

Revenues from the Industrial & Energy Technology unit amounted to $2,945 million, up 9% from the year-ago quarter’s $2,691 million. Our estimate for the metric was pegged at $3,110 million.

Operating income from the segment totaled $474 million, up 37% from the year-ago quarter’s level of $346 million due to higher volumes and pricing, partially offset by cost inflation.

Costs and Expenses

Baker Hughes recorded total costs and expenses of $5,978 million in the third quarter, up from the year-ago figure of $5,927 million. Our projection for the same was pinned at $6,423 million.

Orders

Orders from all business segments amounted to $6,676 million, down 22% year over year from $8,512 million. We expected the figure to be $7,901 million.

The drop was primarily due to lower order intake in the Industrial & Energy Technology and the Oilfield Services and Equipment segments.

Free Cash Flow

Baker Hughes generated a free cash flow of $754 million in the reported quarter compared with $592 million a year ago.

Capex & Balance Sheet

BKR’s net capital expenditure in the third quarter was $256 million.

As of Sept. 30, 2024, it had cash and cash equivalents of $2,664 million. The company had a long-term debt of $5,984 million at the end of the reported quarter, marking a debt-to-capitalization of 27.3%.

Zacks Rank & Stocks to Consider

Baker Hughes currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like Archrock Inc. AROC, PEDEVCO Corp. PED and Cheniere Energy LNG, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.

The Zacks Consensus Estimate for AROC’s 2024 EPS is pegged at $1.10. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

PEDEVCO is engaged in the acquisition and development of energy assets in the United States and Pacific Rim countries. PED stands to benefit significantly from its holdings in the Permian Basin, one of the most prolific oil-producing regions in the United States, as well as in the D-J Basin in Colorado, which includes more than 150 high-quality drilling locations.

The Zacks Consensus Estimate for PED’s 2024 EPS is pegged at $0.08. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 in the past 60 days.

Cheniere is one of the largest exporters of liquefied natural gas in the United States. The company stands to benefit from increased demand for U.S. natural gas, both domestically and globally, as it continues to expand its LNG production capacity. The ongoing surge in natural gas demand could boost Cheniere’s export volumes, supporting its revenue growth.

The Zacks Consensus Estimate for LNG’s 2024 EPS is pegged at $9.86. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

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