Baker Hughes (BKR) Misses Earnings & Revenue Estimates in Q1

Baker Hughes Company BKR has 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 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.

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 $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.

Orders

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%.

View

Baker Hughes expects continued global economic growth this year, leading to increased energy demand. This will likely translate to an attractive business scenario for BKR’s customers.

Zacks Rank & Stock to Consider

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

Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Viper Energy Partners LP VNOM generates strong and steady royalty income from mineral interests in Eagle Ford and the Permian Basin. At 2021-end, VNOM estimated its proved reserves at 128 million barrels of oil equivalent (MMBoe), a year-over-year rise of 29%.

Viper Energy’s earnings for 2022 are expected to increase 172.4% year over year. VNOM was authorized by the board of directors of its general partner to make a cash distribution of 47 cents per common unit, payable Mar 11, 2022, to shareholders of record as of Mar 4, 2022. The metric increased almost 24% from the prior-quarter figure of 38 cents per common unit.

SM Energy Company SM is one of the most attractive players in the exploration and production space. As of Dec 31, 2021, it had proved reserves of 492 MMBoe, of which 41% was crude oil, 42% natural gas and 17% NGLs.

SM Energy’s earnings for 2022 are expected to surge 385.4% year over year. In 2021, SM generated a free cash flow of $378.3 million, which is significantly higher than the year-ago reported figure of $239.5 million.

Canadian Natural Resources Limited CNQ is one of the largest independent energy companies in Canada that explores, develops, and produces oil and natural gas. As of 2021-end, the company had 12.813 billion oil-equivalent barrels in total proved reserves.

Canadian Natural’s earnings for 2022 are expected to increase 41.7% year over year. CNQ raised its dividend by 28% recently, reflecting strength in its cash flows. The company is counted as a 'Canadian Dividend Aristocrat' with an attractive yield. It has a solid track record of dividend hikes, increasing the payout for the past 22 years.

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

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