Baker Hughes Earnings Outperform - Analyst Blog


Baker Hughes Inc. ( BHI ) reported first quarter 2013 adjusted earnings from continuing operations of 65 cents a share, which beat the Zacks Consensus Estimate of 62 cents aided by improved North America results. However, the quarterly figure fell 24.4% from the year-ago adjusted profit level of 86 cents a share.

The year-over-year decline stemmed mainly from seasonal weakness, in particular the Europe/Africa/Russia/Caspian segment. Moreover, weak activity in several important markets of Baker Hughes resulted in an unfavorable mix.

Total revenue of $5,230 million fell 2.3% from the year-ago level of $5,355 million. However, the top line surpassed the Zacks Consensus Estimate of $5,172 million.

First Quarter Segmental Highlights

Of Baker Hughes' total quarterly revenue, North America, Europe/Africa/Russia/Caspian, Middle East/Asia-Pacific and Latin America accounted for 50%, 16%, 17% and 11%, respectively. The remainder was generated by the Industrial Services segment.

An improvement in before-tax profit was noticed in the Middle East/Asia-Pacific region, which recorded a profit before-tax margin of 13% versus 10% in the year-ago quarter. The Industrial Services segment margin remained unchanged at 8%.

All other segments registered lackluster pre-tax margins, with North America coming in at 9% (compared with 14% in the year-earlier quarter) and Latin America coming in at 8% (versus 12%). Pre-tax margins at Europe/Africa/Russia/Caspian segment came in at 11% (versus 17% in the year-earlier quarter).


At the end of the first quarter, Baker Hughes had $1,101.0 million in cash and cash equivalents, while long-term debt was $3,844.0 million, representing a debt-to-capitalization ratio of 18.1%. The company's capital expenditures were $490.0 million in the quarter.


Baker Hughes, the world's third-largest oilfield services provider following Schlumberger Ltd. ( SLB ) and Halliburton Co. ( HAL ), holds a Zacks Rank #3 (Hold) and is expected to perform in line with the broader market over the next few months. However, there are other better performing sector stocks, like Zacks Ranked #1 Range Resources Corporation ( RRC ), that are likely to outperform the market.

BAKER-HUGHES (BHI): Free Stock Analysis Report

HALLIBURTON CO (HAL): Free Stock Analysis Report

RANGE RESOURCES (RRC): Free Stock Analysis Report

SCHLUMBERGER LT (SLB): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: BHI , HAL , RRC , SLB

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