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 (
-- Baker Hughes
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B- . The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows low profit margins.
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Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 29.9% when compared to the same quarter one year prior, rising from $338.00 million to $439.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 13.1%. Since the same quarter one year prior, revenues rose by 12.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.36, which illustrates the ability to avoid short-term cash problems.
- BAKER HUGHES INC has improved earnings per share by 29.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, BAKER HUGHES INC increased its bottom line by earning $3.97 versus $2.00 in the prior year. For the next year, the market is expecting a contraction of 5.5% in earnings ($3.75 versus $3.97).
Baker Hughes Incorporated supplies oilfield services, products, and technology services and systems to the oil and natural gas industry worldwide. The company has a P/E ratio of 11.2, equal to the average energy industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Baker Hughes has a market cap of $20.61 billion and is part of the
industry. Shares are down 3.6% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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