BKR reported 24Q4 GAAP diluted EPS of $1.18 vs. 23Q4’s $0.43 and my estimate of $0.66. Its net income was higher than expected due mostly to a large income tax benefit. Operating income was 34% below my estimate, mostly because of unanticipated restructuring and impairment charges. Non-GAAP EPS was $0.70, compared with $0.51 last year, but matched my estimate of $0.70. Revenues of $7.36 billion rose 7.7% vs. 23Q4 and exceeded my estimate of $7.21 billion. Adjusted EBITDA was $1.24 billion, up 13.7% from 23Q4, but 3.8% below my estimate.
The company booked orders of $7.5 billion, up 8.6% YOY, as strength in Gas Technology from LNG projects, compression trains, upgrades and services offset a low single digit decline in Oilfield Services & Equipment (OFSE). Management expects that pattern of orders to continue throughout most of 2025. Its guidance anticipate orders of $12.5-$14.5 billion for the Industrial & Energy Technology segment (which includes Gas Technology), up 4%. With another down year in OFSE orders, total company orders should be flattish.
Management expects OFSE to generate 2025 revenues of $14.5-$15.5 billion, compared with $15.6 billion in 2024 and EBITDA of 2.85-$3.15 billion vs. $2.88 billion. It anticipates IET revenues of $12.4-$13.1 billion in 2025, compared with 2024’s $12.2 billion, and IET EBITDA of $2.2-$2.4 billion, up from $2.1 billion. It also forecasts corporate expenses of $340 million.
Based mostly upon that guidance, I now anticipate 2025 revenues of $29.0 billion, up 4.2% from 2024, GAAP EPS of $2.67 (vs. $2.98) and non-GAAP EPS of $2.63, up from $2.37. For 2026, I project revenues of $29.1 billion, $30.6 billion, up 5.4%, GAAP EPS of $2.90 and non-GAAP EPS of $2.86.
BKR’s stock continues to outperform the broader market and peers. Since my Oct. 23 report, the stock has risen 25.4%, outpacing the S&P 500’s 5.4% advance and the OSX’s 1.8% decline. At the current price of $46.40, BKR is valued at 16.0 times projected 2026 GAAP EPS and 16.2 times non-GAAP EPS. Its valuation premium has widened against peers (HAL, NOV and SLB), which trade at 10.0 times projected 2026 non-GAAP EPS. With its market leading position in LNG, BKR is increasingly being seen as a beneficiary of the expected growth in gas-fired power generation from the expansion in AI data centers. While many AI-connected stocks have seen their valuations soar, BKR’s expanding multiple seems speculative, especially in light of its slowing earnings growth. Based upon 24Q4 results and the expansion in its forward multiple, I am raising my price target from $40 to $49. The new price target equates to a forward P/E multiple of 17 times projected 2026 GAAP and non-GAAP earnings. Along with its 2.0% dividend yield, the potential total return is 7.6%. Thus, I am maintaining my rating of “3” (Neutral) on the stock.
This is a summary of my recent update report on Baker Hughes Company (BKR). To obtain a copy of the report, please reach out to me using the contact information provide below.
March 13, 2025 (Report published on February 17, 2025.)
Stephen P. Percoco
Lark Research
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© 2015-2025 by Stephen P. Percoco, Lark Research. All rights reserved.
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