BKR reported 25Q2 GAAP diluted EPS of $0.71 vs. 24Q2’s $0.58 and my estimate of $0.58. Net income was higher than expected due mostly to lower SG&A expenses and a $130 million fair value gain from its equity investment in Abu Dhabi National Oil Company. Total revenue of $6.91 billion was down 3.2% from a year ago and 0.9% above my estimate. Operating income increased 5% to $887 million on higher goods margin and lower SG&A costs, and was 6.2% above my estimate. Non-GAAP EPS was $0.63, compared with $0.57 last year and my estimate of $0.58. Adjusted EBITDA was $1.18 billion, up 4.4% from 24Q2 and 5.3% above my estimate.
The company booked orders of $7.03 billion in the quarter, down 6.6% YOY, with declines of 13.9% in Oilfield Services & Equipment (OFSE) and 21.9% in Gas Technology that were only partially offset by a 135% surge in Climate Technology Solutions orders. Still, management touted the breadth of its Gas Technology business as the company booked $550 million of turbine orders for data centers and no LNG orders in the quarter.
The company announced three portfolio optimization actions, including agreements to divest its Precision Sensors & Instruments business and nearly all of its stake in its Surface Pressure Control business for total proceeds of $1.5 billion. BKR has also agreed to acquire Continental Disc Corporation, a leading provider of safety-critical pressure management solutions, which will become a part of its Industrial Energy & Technology segment.
Management has reinstated its 2025 full year guidance, which is mostly consistent with its views at the beginning of the year. My 2025 projections, which are in line with that guidance, now show total revenue of $27.7 billion (little changed from my previous report), GAAP diluted EPS of $2.51 (vs. $2.48 previously) and non-GAAP EPS of $2.52 (vs. $2.57). For 2026, my projections are also little changed, with revenues of $29.2 billion, up 5.5% from 2025, GAAP EPS of $2.86 (vs. $2.90) and non-GAAP EPS of $2.83 (vs. $2.87). My projections implicitly assume that oil and natural gas prices will rebound to the low $70s for oil and around $4.00 for natural gas.
Since my last report on April 24, BKR’s stock has surged 26.5%, outpacing the S&P 500’s 16.0% gain and the OSX’s 12.3% gain. Most of the outperformance has occurred over the past two days, following the release of 25Q2 earnings. At the current price of $45.72, BKR is valued at 18 times projected 2025 GAAP EPS and non-GAAP EPS and 16 times 2026 GAAP and non-GAAP EPS. Its valuation premium vs. peers (HAL, NOV and SLB), which trade at 11 times projected 2025 non-GAAP EPS, has widened meaningfully. Based its premium valuation vs. peers, I am maintaining my price target of $44, which equates to about 15 times projected 2026 GAAP and non-GAAP EPS. Since BKR’s stock price is above the price target, I am lowering my performance rating from “1” (Buy) to “3” (Neutral).
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 provided below.
July 25, 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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