Long-established in the Oil & Gas industry, Baker Hughes Co (BKR, Financial) has enjoyed a stellar reputation. It has recently witnessed a surge of 2.25%, juxtaposed with a three-month change of 30.16%. However, fresh insights from the GuruFocus Score Rating 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.
Decoding 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.
- 1. Financial strength rank: 6/10
- 2. Profitability rank: 5/10
- 3. Growth rank: 1/10
- 4. GF Value rank: 1/10
- 5. Momentum rank: 9/10
Based on the above method, GuruFocus assigned Baker Hughes Co the GF Score of 58 out of 100, which signals poor future outperformance potential.
Understanding Baker Hughes Co's Business
Baker Hughes Co, with a market cap of $37.36 billion, is a global leader in oilfield services and oilfield equipment. It has particularly strong presences in the artificial lift, specialty chemicals, and completions markets. The company 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. The company's sales stand at $23.3 billion with an operating margin of 9.89%.
Profitability Breakdown
Baker Hughes Co's low Profitability rank can also raise warning signals. This indicates that the company's profitability is lower than that of other companies in the industry, which could impact its ability to generate returns for investors.
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 -20.6 per year over the past three years, which underperforms worse than 89.55% of 852 companies in the Oil & Gas industry. Stagnating revenues may pose concerns in a fast-evolving market.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Baker Hughes Co has a strong reputation in the industry, its current metrics suggest that it may struggle to maintain its historical performance. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
