Baker Hughes Scores High on P/E/Growth Investor Strategy

A recent report indicates Baker Hughes Co (BKR) achieves a 74% rating under the P/E/Growth Investor model, primarily due to its favorable fundamentals and valuation. However, concerns arise from an EPS growth rate that fails to meet expectations.

Date: 10-12-2024

AI Rating: 5

The report highlights Baker Hughes Co (BKR) as a large-cap growth stock within the Oil Well Services & Equipment industry, achieving a notable rating of 74% under the P/E/Growth Investor model inspired by Peter Lynch.

This score suggests that while BKR presents a reasonable price relative to earnings growth and maintains robust balance sheet attributes, it does not fully escape scrutiny. The detailed criteria evaluation shows several strengths:

P/E/Growth Ratio: Pass
Sales and P/E Ratio: Pass
Inventory to Sales: Pass
Total Debt/Equity Ratio: Pass

However, the report notes a significant weakness:

EPS Growth Rate: Fail

While the total debt/equity ratio and other factors point to solid financial health, the failure of the EPS growth rate raises potential concerns for investors. EPS (Earnings Per Share) is crucial as it reflects a company's profitability on a per-share basis. A failing EPS growth rate indicates that BKR might struggle to increase its profit per share over time, which can dissuade investors seeking growth opportunities.

Free cash flow and net cash position are marked as neutral, suggesting that they neither add significant positive nor negative pressure on the stock’s valuation. The combination of a solid rating overall but a failed EPS growth could lead investors to approach BKR with caution. If no improvement in EPS occurs, stock prices may remain stagnant or face downward pressure, affecting investor sentiment adversely.

Stocks: BKR