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 revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- BHI's revenue growth trails the industry average of 24.5%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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 1.33, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 188.77% to $823.00 million when compared to the same quarter last year. In addition, BAKER HUGHES INC has also vastly surpassed the industry average cash flow growth rate of 25.46%.
- BAKER HUGHES INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BAKER HUGHES INC increased its bottom line by earning $3.92 versus $2.00 in the prior year. For the next year, the market is expecting a contraction of 14.0% in earnings ($3.37 versus $3.92).
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 $18.77 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 13.4, below the S&P 500 P/E ratio of 17.7. Shares are down 12.2% year to date as of the close of trading on Thursday.
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--Written by a member of TheStreet Ratings Staff.
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