Baker-Hughes: Energy Stock Winners
NEW YORK (
) --
Oil services company
Baker Hughes
(BHI)
beat the Street on both the top and bottom line on Monday morning, with earnings of 59 cents, 54 cents excluding special items, well ahead of the consensus call for earnings per share of 47 cents from Baker Hughes. Top line for Baker Hughes also topped the $4 billion mark, whereas the Street was looking for revenue of $3.8 billion.
Baker Hughes shares are up more than 5% on Monday morning. The earnings season outperformers among oil services stocks have been the ones for which the Street has had the lowest expectations coming into earnings reports.
Baker Hughes shares were trading at their highest value since early August as a result of Monday morning's earnings rally. It was also a good morning for the markets, with the energy sector up by 1.5% early on Monday.
Baker Hughes has been the dog of the group, failing on execution, and with the recent acquisition of
BJ Services
complicating the Street view -- but it seems to have gotten some things right in the most recent quarter. This quarter was the first that fully included BJ Services' numbers. BJ Services' pressure-pumping business helped to boost the Baker Hughes earnings.
Two other oil services companies,
Halliburton
(HAL) - Get Report
and
Weatherford International
(WFT) - Get Report
, beat the Street this quarter but sold off anyway as expectations for earnings had run very high.
>>Weatherford Dip Echoes Halliburton
In the case of Halliburton, the picture was made more complicated by the revelations from the government last week that its cement job has become an even greater focus on the BP oil spill inquiry. Halliburton shares slipped by 10% on Thursday, but some were seeing the oil-spill selloff as a reason to buy Halliburton shares. Oppenheimer & Co. upped its rating on Halliburton to a buy on Monday morning.
>>Halliburton Stock Crash: 4 Key Questions
The big number in the Baker-Hughes earnings is the quadrupling of profit from the third quarter last year, but Halliburton and Weatherford also reported eye-popping profit gains, as did
Schlumberger
(SLB) - Get Report
.
Schlumberger also rallied on its earnings, even though its report mirrored the details presented by Halliburton and Weatherford. There was less expected of Schlumberger than of Halliburton, and the Baker Hughes outperformance could signal to some investors that the company is finally back on track.
The outlook for the oil-services business wasn't any different from Baker Hughes than it had been from the other oil-services companies. Profit continued to rely on North American land-based drilling, with international expected to recover, but still in a lull and unchanged from the last quarter, and the Gulf of Mexico drilling, even after the end of the drilling ban, still a wildcard with permitting delays expected.
Chad Deaton, Baker Hughe' CEO stated in the earnings, "Looking ahead, we expect global economic expansion to increase demand for oil and drive continued growth in our international markets. In North America we expect increases in drilling for oil and wet gas to offset weakness in dry-gas activity. While we are encouraged that the Gulf of Mexico deepwater drilling moratorium has ended, the recovery of drilling in the Gulf, both in the deepwater and on the shelf, will depend on the pace of permit approval within the new regulatory framework."
-- Written by Eric Rosenbaum from New York.
RELATED STORIES:
>>Schlumberger: Energy Winners & Losers
>>Halliburton Stock Crash: 4 Key Questions
>>Energy Losers: has Halliburton Peaked?
>>Weatherford Dip Echoes Halliburton
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