Baker Hughes Inc. Stock Hold Recommendation Reiterated (BHI)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Baker Hughes (NYSE:BHI) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

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Highlights from the ratings report include:

• BHI's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.39, which illustrates the ability to avoid short-term cash problems.
• Net operating cash flow has slightly increased to $888.00 million or 7.63% when compared to the same quarter last year. Despite an increase in cash flow, BAKER HUGHES INC's average is still marginally south of the industry average growth rate of 16.82%.
• The gross profit margin for BAKER HUGHES INC is rather low; currently it is at 24.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.09% trails that of the industry average.
• The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Energy Equipment & Services industry and the overall market, BAKER HUGHES INC's return on equity is below that of both the industry average and the S&P 500.

Baker Hughes Incorporated supplies oilfield services, products, and technology services and systems to the oil and natural gas industry worldwide. Baker Hughes has a market cap of $20.14 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 15.3, below the S&P 500 P/E ratio of 17.7. Shares are up 12.2% year to date as of the close of trading on Wednesday.

You can view the full Baker Hughes Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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For more information on Baker Hughes Inc. click any of the following:

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• Baker Hughes Inc. Income Statement