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It has been about a month since the last earnings report for Baker Hughes (BKR). Shares have added about 6.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Baker Hughes due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Baker Hughes (BKR) Q1 Earnings & Revenue Miss Estimates
Baker Hugheshas reported first-quarter 2022 adjusted earnings of 15 cents per share, missing the Zacks Consensus Estimate of 19 cents. However, the bottom line improved from the year-ago quarter’s earnings of 12 cents per share.
Total quarterly revenues of $4,835 million missed the Zacks Consensus Estimate of $4,994 million. The top line increased from the year-ago quarter’s $4,782 million.
The lower-than-expected results were primarily caused by a decline in cost productivity and inflation pressures in Digital Solutions. This was offset by higher contributions from the Oilfield Services business unit.
Revenues from the Oilfield Services unit amounted to $2,489 million, up 13% from the year-ago quarter’s figure of $2,200 million. Baker Hughes’ operating income from the segment was $221 million, up from $143 million reported in first-quarter 2021, backed by higher volumes and prices.
Revenues of Baker Hughes from the Oilfield Equipment unit totaled $528 million, down 16% from the prior-year quarter’s $628 million. The segment was affected by a decline in volumes in Baker Hughes’ Subsea Productions Systems and Surface Pressure Control Projects. Increased volumes in Flexibles and Services partially offset the negatives. The segment reported a loss of $8 million, turning around from a profit of $4 million in first-quarter 2021.
Revenues of Baker Hughes from the Turbomachinery & Process Solutions unit declined to $1,345 million from $1,485 million a year ago due to a decline in equipment and project revenues. The segmental income of Baker Hughes increased to $226 million from $207 million in the first quarter of 2021, owing to higher services revenues and cost productivity.
Revenues of Baker Hughes from the Digital Solutions segment amounted to $474 million, up marginally from $470 million in the year-ago quarter. Waygate Technologies business witnessed higher volumes that supported revenue growth. The operating profit of Baker Hughes in the segment totaled $15 million, down 38% from the year-ago quarter’s $24 million. The segment was affected by a decline in cost productivity and inflation pressures.
Costs and Expenses
Baker Hughes recorded total costs and expenses of $4,556 million in the first quarter, down from the year-ago quarter’s figure of $4,618 million.
Total orders of Baker Hughes from all business segments in first-quarter 2022 amounted to $6,837 million, up 51% year over year due to higher-order intakes from segments like Turbomachinery & Process Solutions, Oilfield Equipment, Oilfield Services and Digital Solutions.
Free Cash Flow
Baker Hughes generated a negative free cash flow of $105 million in the reported quarter against the free cash flow of $498 million in the year-ago period.
Capex & Balance Sheet
Baker Hughes’ net capital expenditure in the first quarter totaled $177 million.
As of Mar 31, 2022, Baker Hughes had cash and cash equivalents of $3,191 million. At the first-quarter end, the company had long-term debt of $6,650 million, implying a debt-to-capitalization of 28.9%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -12.66% due to these changes.
Currently, Baker Hughes has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Baker Hughes has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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