Today we're going to take a closer look at large-cap Industrials company Baker Hughes Company, whose shares are currently trading at $32.3. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
Baker Hughes Company's Valuation Is in Line With Its Sector Averages:
Baker Hughes Company provides a portfolio of technologies and services to energy and industrial value chain worldwide. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 22.19 and an average price to book (P/B) ratio of 4.06. In contrast, Baker Hughes Company has a trailing 12 month P/E ratio of 19.3 and a P/B ratio of 2.13.
When we divideBaker Hughes Company's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.47, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
Low Leverage Levels but Declining EPS Growth:
2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
---|---|---|---|---|---|---|
Revenue (MM) | $22,877 | $23,838 | $20,705 | $20,502 | $21,156 | $24,577 |
Revenue Growth | n/a | 4.2% | -13.14% | -0.98% | 3.19% | 16.17% |
Operating Margins | 3% | 5% | -73% | 6% | 6% | 10% |
Net Interest Expense (MM) | $202 | -$84 | $1,040 | -$299 | -$252 | $385 |
Depreciation & Amort. (MM) | $1,486 | $1,418 | $1,317 | $1,105 | $1,061 | $1,067 |
Free Cash Flow (MM) | $767 | $886 | $330 | $1,518 | $899 | $1,891 |
Capital Expenditures (MM) | $995 | $1,240 | $974 | $856 | $989 | $1,137 |
Current Ratio | 1.66 | 1.52 | 1.61 | 1.65 | 1.32 | 1.27 |
Total Debt (MM) | $6,316 | $6,622 | $6,895 | $6,727 | $6,263 | $6,659 |
Net Debt / EBITDA | 1.19 | 1.35 | -0.2 | 1.19 | 1.68 | 0.98 |