Baker Hughes Co (BKR)

Conclusion

Baker Hughes Co (BKR.US) provides oilfield services and equipment, plus gas technology, non-destructive testing and industrial energy technology. On 2026-11-09 the shares traded at 48.45 USD, giving a market capitalisation of 48.11 billion USD and an enterprise value of 60.98 billion USD.

The verdict is fair. The company trades at 11.9x EV/EBITDA against a ten-year median of 13.8x, a discount of 13.8%, and at 14.9x price to free cash flow against a median of 22.5x, a discount of 33.7%. The discounted cash flow gives 49.33 USD per share, and the fair value band runs from 39.83 to 59.75 USD with a midpoint of 49.79 USD, a margin of safety of 2.8%. The price implies 4.9% annual growth in reverse DCF, against 6.0% revenue growth over five years and 27.2% growth in free cash flow per share over the same period.

What holds the case up is cash generation: free cash flow conversion is 111.4% on a trailing basis, the company beat earnings estimates in all 8 recent quarters, and the operating margin of 12.1% sits well above its ten-year median of 5.5%. What could break it is the balance sheet and dilution. The Altman Z-score is 1.49, net debt to EBITDA is 2.5x, and the share count has grown by 8.05% a year over five years. Analysts have also cut next-year estimates by 9.66% over 90 days.

Financial health

Financial strength is yellow: interest coverage of 9.2x and a current ratio of 1.24 support the company, while the Altman Z-score of 1.49 and net debt to EBITDA of 2.5x pull it down. The quick ratio is 0.76 and debt to equity is 0.91. The Altman model was designed for manufacturers, and Baker Hughes is partly one, so its zone of distress should be read with that in mind. Insolvency risk is low, about 0.3% by the estimate of the Ohlson model over one to two years, based on year-end 2025 figures. The company's trailing net debt is manageable against its operating earnings, but the Altman reading means lenders and rating agencies will watch leverage closely. No debt maturity schedule is available, so refinancing risk cannot be sized here.

Earnings quality

Earnings quality is yellow: free cash flow conversion of 111.4% trailing and 158.5% over five years, a Piotroski score of 7 out of 9, and eight straight earnings beats are strong, but share dilution is a clear weakness. The accrual ratio is -0.0308, meaning reported earnings are backed by cash. Stock-based compensation is 0.73% of revenue, and free cash flow after it is 3.02 billion USD. The share count has grown at 8.05% a year over five years, which is a bad signal. The Beneish M-score is not available. Analysts have made six downgrades to the current year's estimates in the last 30 days, and the current year's estimate has barely moved over 90 days, at 0.3%.

Profitability

Profitability is green. The gross margin is 23.5% against a ten-year median of 21.4%, the operating margin is 12.1% against 5.5%, and the net margin is 10.1% against 0.7%. Margin stability is 0.70. Return on invested capital is 10.0%, against a weighted average cost of capital of 8.6%, so the spread is narrow, at 1.4 percentage points, and rated neutral. The five-year median ROIC is 11.3%, so current returns sit slightly below their history. Return on equity is 14.4%, but the DuPont split shows that leverage helps: a net margin of 9.3%, an asset turnover of 0.68 and an equity multiplier of 2.17 combine to produce it.

Growth

Growth is yellow. Revenue compounded at 9.4% over three years, 6.0% over five and 5.2% over ten, and revenue grew in 6 of the last 10 comparable years. Free cash flow per share grew much faster recently, at 31.2% over three years and 27.2% over five, but only 5.1% over ten. The gap between revenue and per-share cash flow growth partly reflects the rising share count. Growth in earnings per share cannot be assessed from the figures provided. Next-year estimated growth is 9.8%, rated good, but the estimate itself has been cut over the last 90 days.

Valuation

Valuation is yellow. The price-to-earnings ratio is 16.6x, but only four historical points exist, so no ten-year median is available for it. EV/EBITDA is 11.9x against a median of 13.8x, a discount of 13.8%, and price to free cash flow is 14.9x against 22.5x, a discount of 33.7%. Price to sales is 1.67x against 1.25x, a premium of 33.4%, and price to book is 2.39x against 2.08x, a premium of 14.8%. The DCF gives 49.33 USD per share at a discount rate of 10.16%, and the fair value from historical multiples is 50.25 USD. Around 51% of the DCF value sits in the terminal value, so it should be read with caution. The fair value band is an order-of-magnitude estimate built on fixed assumptions, not a price target. The dividend yield is 1.89%, with a payout of 28.2% of free cash flow.

Risks

The weakest numbers are the Altman Z-score of 1.49, net debt to EBITDA of 2.5x, and the five-year share count growth of 8.05% a year. A distress-zone score and high leverage leave less room for a downturn in oilfield activity, and continued dilution dilutes per-share returns for shareholders. The narrow spread between ROIC and WACC, at 1.4 percentage points, means little margin for error in capital allocation. Half of the DCF value depends on the terminal assumption, so a small change in long-term assumptions would move the fair value. Next-year estimates have been cut by 9.66% over 90 days, which points to near-term earnings risk. Not available: the Beneish M-score, earnings per share growth, the debt maturity schedule and revenue by segment. This analysis therefore cannot test refinancing risk or show which business lines drive growth.