Why Baker Hughes (BHI) Stock Is Surging In Pre-Market Trade

NEW YORK (TheStreet) -- Shares of Baker Hughes Inc. (BHI) are up 3.68% to 68.75 in pre-market trade as the oilfield services company reported revenue of $5.7 billion for the 2014 first quarter, up 10% year over year.

Adjusted net income of 84 cents for the quarter was up 29% year over year.

Baker Hughes Chairman and CEO Martin Craig said: "Our performance is the result of actions to optimize operational efficiency, along with increasing demand for several innovative new product offerings.

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TheStreet Ratings team rates BAKER HUGHES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate BAKER HUGHES INC (BHI) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BHI's revenue growth has slightly outpaced the industry average of 8.2%. Since the same quarter one year prior, revenues rose by 10.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • BHI's debt-to-equity ratio is very low at 0.25 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 1.43, which illustrates the ability to avoid short-term cash problems.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 37.70% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • BAKER HUGHES INC has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BAKER HUGHES INC reported lower earnings of $2.47 versus $2.98 in the prior year. This year, the market expects an improvement in earnings ($4.04 versus $2.47).
  • Net operating cash flow has increased to $1,003.00 million or 12.95% when compared to the same quarter last year. Despite an increase in cash flow, BAKER HUGHES INC's cash flow growth rate is still lower than the industry average growth rate of 23.27%.
  • You can view the full analysis from the report here: BHI Ratings Report

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