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Baker Hughes (BHGE) Q2 Earnings Miss, Orders Increase Y/Y

Baker Hughes, a GE company BHGE reported second-quarter 2018 adjusted earnings of 10 cents per share, missing the Zacks Consensus Estimate of 13 cents owing to a drop in volumes of contractual activities and Subsea Services. This was partially negated by increased pressure pumping activities and contributions from Inspection Technologies.  

However, revenues of $5,548 million marginally beat the Zacks Consensus Estimate of $5,547 million and also improved the year-ago $3,015 million.

Segmental Performance

Revenues from the Oilfield Services unit were recorded at $2,884 million, up 14% from the year-ago sales of $2,529 million.

Operating income at the business segment came in at $189 million, up from $26 million in second-quarter 2017.

Higher activities related to pressure pumping, artificial lift and completions & drilling primarily aided the segment.

The Oilfield Equipment unit reported revenues of $617 million, down 9% from the prior-year quarter of $681 million.

Moreover, the segment reported loss of $12 million against a profit of $17 million in the April-to-June quarter of 2017, thanks to dip in business volumes related to Subsea Services and Drilling Systems.

Revenues from the Turbomachinery & Process Solutions unit declined to $1,385 million from $1,586 million in the year-ago quarter.

Moreover, segmental income slipped to $113 million from $122 million in the second quarter of 2017 owing to fall in volumes of contractual activities.

The Digital Solutions reported revenues of $662 million, up 7% from $620 million a year ago.

Operating profit from the business segment totaled $96 million, up 56% from the year-ago level of $62 million. Higher contributions from businesses associated with Inspection Technologies supported the segmental performances.

Orders

Total orders from the all business segments through second-quarter 2018 came in at roughly $6 billion, up 9% year over year. Oilfield Services and Oilfield Equipment business units contributed to roughly $2.9 billion and $1 billion orders, respectively.

Outlook

The company foresees higher activities in the several international markets. Baker Hughes also expects higher growth in the coming quarters which will likely be backed by rising rig count and operating wells in North America.

Balance Sheet

Baker Hughes’ capital expenditure in the second quarter grossed $161 million. As of Jun 30, 2018, the company had approximately $4.9 billion in cash, cash equivalents and restricted cash and $6.3 billion in long-term debt, representing a debt-to-capitalization ratio of 16.7%.

Baker Hughes, a GE company Price, Consensus and EPS Surprise

Baker Hughes, a GE company Price, Consensus and EPS Surprise | Baker Hughes, a GE company Quote

Zacks Rank & Stocks to Consider

Baker Hughes carries a Zacks Rank #4 (Sell). However, better-ranked players in the energy space include Continental Resources, Inc. CLR, Murphy Oil Corporation MUR and Marathon Oil Corporation MRO. While Marathon Oil has a Zacks Rank #2 (Buy), Continental Resources and Murphy Oil sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Resources’ earnings beat the Zacks Consensus Estimate in the last three quarters, the average positive surprise being 80.5%.

Murphy Oil’s bottom line surpassed the consensus mark in each of the last four quarters, the average positive earnings surprise being 102.5%.

We expect Marathon Oil to witness year-over-year earnings growth of 336.8% in 2018.

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Continental Resources, Inc. (CLR): Free Stock Analysis Report
 
Murphy Oil Corporation (MUR): Free Stock Analysis Report
 
Marathon Oil Corporation (MRO): Free Stock Analysis Report
 
Baker Hughes, a GE company (BHGE): Free Stock Analysis Report
 
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