Baker Hughes BKR
Energy · Oil & Gas Equipment & Services · Synthos Deep Dive · 2026-07-03
The Overview
Baker Hughes makes the equipment and services that oil, gas, and LNG companies use to pump, process, and move energy — plus, increasingly, the big gas turbines and generators that power LNG export terminals and AI data centers. It sells to energy producers worldwide, not to consumers.
Is the stock cheap or expensive? Cheap. You pay about 17 dollars for every dollar of profit — well below the market — and the company carries very little debt. The catch is that its profits rise and fall with the oil-and-gas cycle, so "cheap" can stay cheap if energy spending slows. Wall Street's price targets ($60–$80, average ~$73) sit well above today's $52.78 — but the stock has just fallen 24% from its high, and its momentum gauge is flashing "deeply oversold."
Our verdict is Buy — Tactical: a reasonable bet for a smaller, opportunistic slice of a portfolio, bought while it's beaten down — not a steady core holding you forget about.
Here's what our three scores mean in everyday terms:
- Downside Risk 4/10 (below average risk). The balance sheet is strong and the valuation is modest, which limits how far it should fall — but it's a cyclical energy name in a downtrend, so it can still lurch around.
- Growth Quality 6/10 (decent, not great). One half of the company (the LNG/power gear) is growing nicely; the other half (oilfield services) is shrinking, so the blend is only okay.
- Exponential Potential 4/10 (limited). The data-center-power and LNG order book is a real bright spot, but the old oilfield business holds back the overall growth rate.
The one big worry: if oil prices fall or producers cut spending, the larger oilfield half of the business gets hit — and management has already flagged disruption in the Middle East.
Putting a number on it: our fair-value estimate is $60 against a current price of $62.41 — consistent with our call to stay away or wait for a better setup.
Our summary metrics
Cheap (16.7× / 10.5× EV-EBITDA), net-debt/EBITDA 0.27× and beta 0.94 — but cyclical, oil-levered, and in a −24% drawdown.
Only ~8% forward EPS CAGR, 24% gross margin, ROIC ~8% — the growth quality lives in IET (LNG/power), not the whole.
IET backlog (record $33B, book-to-bill 1.5×) is a real accelerant, but OFSE decline drags the blended rate — modest, not exponential.
What does “fair value” mean?
Fair value is Synthos’s estimate of what one share is worth today, based on our model of the company’s future cash generation and the risks to it. It is not a price target or a prediction of where the stock trades next quarter — it’s the price where we think risk and reward are balanced. Above it, you’re paying for outcomes better than our base case; below it, the market is offering a margin of safety.
The model’s inputs and weightings are proprietary — they’re the product. What we publish is the output, We don’t publish a reverse-DCF cross-check for pre-profit companies — negative or missing earnings break that math — so take this number on our modeling alone.
What do the 5 tiers mean? (Core · Tactical · Watch · Hold · Avoid)
Exponential Potential
IET backlog (record $33B, book-to-bill 1.5×) is a real accelerant, but OFSE decline drags the blended rate — modest, not exponential.
What could take this further than the base case — and where the market may be underpricing it. Full forward-growth and acceleration math in Deeper analysis, §4 below.
Deeper analysis
Technicals, fundamentals, valuation, and the full expert-claim evidence panel — the detail behind the numbers above.
Reference table
| Street consensus | $73.2 (high $80 / low $60; 30 Buy · 14 Hold · 1 Sell) — context, not our anchor |
| Valuation | 16.7× trailing EPS · ~22× FY26E · 18× FY27E · 15× FY30E · EV/S 1.9× · EV/EBITDA 10.5× |
| Technicals | Broken / oversold — $52.78, −24% off 52-wk high, below both 50-DMA ($63.41) and 200-DMA ($55.61), RSI 9.8 (deeply oversold), MACD −2.64 |
| Conviction | Low — 0 expert voices, 0 traceable claims in the Synthos KB; this is a quant/fundamentals call |
| Position sizing | Tactical / satellite, ~1–3%, scale in — not a core holding |
What the experts actually said
No independent expert claims in the Synthos knowledge base yet for BKR — this dive is fundamentals- and technicals-driven, not panel-driven.
Price & moving averages 12 months · 50 & 200-day averages · 52-week range
Solid line = price · dashed line = 50-day average · dotted line = 200-day average · the two thin horizontal lines mark the 52-week high and low. Price above both averages is an uptrend.
Data summary: last close $62.41, 5% above the 50-day average ($59), 7% above the 200-day average ($58) — an uptrend. 10% below the 52-week high of $70, 40% above the 52-week low of $44.
Bollinger Bands 20-day average ± 2 standard deviations
The shaded band widens when the stock gets more volatile. Riding the upper edge = strong momentum (sometimes stretched); the lower edge = weak / potentially oversold.
Data summary: price $62.41 is currently inside the band (band $60–$66).
RSI (14) momentum gauge · 0–100
Above 70 (overbought zone, shaded) = overbought, below 30 (oversold zone, shaded) = oversold. Currently 53.
MACD 12 / 26 / 9 · trend & momentum
The MACD line crossing above the signal line (bars flip to the up color) = momentum turning up; crossing below (bars flip to the down color) = turning down. Bar height = the size of that gap.
Data summary: MACD is currently below its signal line by 0.35, negative momentum.
Relative performance vs S&P 500 & its sector (XLE (sector)), set to 100 a year ago
Solid = BKR · dashed = S&P 500 · dotted = XLE (sector). A rising line means it is beating that benchmark — the sector line shows whether it is a leader or laggard within its own group.
Forward revenue & earnings actual → estimate · "FY" = fiscal year, "E" = estimate
Darker bars = actual results, brighter = analyst estimates. Taller bars to the right = expected growth.
Key stats an RIA wants
1. What it is
Baker Hughes (Nasdaq: BKR) is a Houston-based, ~$52B energy-technology company (56,000 employees, founded 1987, current form since the 2017 GE Oil & Gas merger), led by CEO Lorenzo Simonelli. It runs two segments:
- Oilfield Services & Equipment (OFSE) — the legacy business: drilling, completions, production and intervention products and services for onshore/offshore oil & gas. FY25 revenue $14.32B (down from $15.63B in FY24) — the mature, oil-price-levered half that is currently shrinking.
- Industrial & Energy Technology (IET) — turbomachinery and process solutions: LNG liquefaction trains, gas turbines and power generation (including for AI data centers), pipelines, gas storage, CCS, and industrial applications. FY25 revenue $13.41B (up from $12.20B in FY24, and $10.15B in FY23) — the growing half, and the entire investment case.
Fiscal year ends December 31.
Revenue mix (FY2025, from filings):
- By segment: OFSE $14.32B (52%) · IET $13.41B (48%). The mix is shifting toward IET every year (IET was 40% of revenue in FY23) — OFSE shrank ~8% while IET grew ~10% in FY25.
- By geography: Non-US $20.03B (72%) · United States $7.70B (28%). This is an internationally-diversified, LNG/infrastructure-weighted book — the opposite of a US-shale pure-play — with FX and geopolitical exposure as the trade-off.
The strategic arc management calls "Horizon 2" (2026–2028) is exactly this pivot: lean on IET's energy-infrastructure order book (LNG, gas power, data-center power, CCS) while running OFSE for cash and margin, and prune the portfolio (recent divestitures of Precision Sensors, Waygate Technologies, and a surface-pressure-control JV with Cactus — ~$3B of gross proceeds targeted in 2026).
2. The expert thesis
There is no expert coverage of BKR in the Synthos knowledge base — total_claims is 0, with zero net-bullish voices and zero cautionary voices. No independent analyst or investor claims have been distilled and reconciled for this name. Every judgment in this note is therefore fundamentals- and quant-driven, built from the FMP financials, analyst estimates, the SEC 8-K earnings release, and the technical block — not from Synthos's conviction panel.
This matters for how you read the verdict: unlike our high-breadth conviction names, BKR carries no expert-panel corroboration. The "Buy — Tactical" call rests entirely on cheap valuation, a strong balance sheet, and a demonstrable IET backlog inflection — a lower-conviction structure by design. Where the Street's own sell-side view is relevant we show it as context (30 Buy / 14 Hold / 1 Sell, $73.2 target), but it is not our anchor. Treat this note as a quant/fundamentals read, and size it accordingly.
3. Synthos scores & the Bull / Base / Bear cases
The one-glance judgment — three scores, 0–10, each anchored to real metrics (not probabilities we can't honestly calibrate):
| Score | 0–10 | The read |
|---|---|---|
| Downside Risk (lower = safer) | 4 · Below-average | Modest valuation (16.7× trailing, 10.5× EV/EBITDA), net-debt/EBITDA just 0.27×, current ratio 2.1×, beta 0.94 — but it is a cyclical energy name in a −24% drawdown with oil-price exposure and flagged Middle East disruption. |
| Growth Quality | 6 · Decent | Only ~8% forward EPS CAGR and a thin 24% gross margin, ROIC ~8% and ROE ~17% — but IET is a bona-fide high-quality growth engine (record backlog, expanding margins) dragged by shrinking OFSE. |
| Exponential Potential | 4 · Low-Moderate | IET's record $33.1B backlog and 1.5× book-to-bill (LNG + data-center power) is a real accelerant, but the blended corporate growth rate is capped by legacy OFSE decline. Not a multibagger profile. |
The three cases (our own scenario model — assumptions shown; each target is a ~12–18-month fair value). We deliberately do not attach probabilities: the base case is by definition the expected path, so a weighted blend would just restate it with false precision. Instead the cases bound the range, and the scores above summarize them.
| Case | Key assumptions | Fair value |
|---|---|---|
| Bull | IET backlog converts strongly; data-center-power + LNG demand keeps book-to-bill >1; OFSE stabilizes; margins expand. FY27E adj. EPS beats to ~$3.25; cyclical-growth re-rate to ~24×. | ~$78 (+48%) |
| Base (our anchor) | Estimates roughly hit — FY27E adj. EPS ~$2.86; a mid-cycle energy-infra name earns ~21× as the IET mix keeps rising. | ~$60 (+14%) |
| Bear | Oil rolls over / upstream capex cuts hit OFSE; Middle East disruption deepens; IET conversion slips. FY27E adj. EPS misses to ~$2.55; de-rate to ~16.5×. | ~$42 (−20%) |
Synthos fair value = the base case, ~$60 (+14%), with the full $42–$78 span as the honest range. Our base sits below the Street's $73.2 consensus — we haircut for cyclicality and OFSE drag and are not willing to underwrite the Street's implied multiple on a name whose larger segment is shrinking. Notably, our bear ($42) is below the Street's low ($60) — we take the down-cycle scenario more seriously than the sell-side does. This is a tracked call — the Forecaster Scorecard grades it once it matures.
4. Exponential Potential
Synthos separates compounders (durable high returns on capital) from exponentials (accelerating, multi-baggers-from-here). BKR is neither a pure compounder nor an exponential — it is a cyclical in the middle of a favorable mix-shift:
- Forward growth (modest): revenue CAGR FY25→FY30E ~3.1% ($27.7B → $32.4B); adjusted EPS CAGR ~7–8% ($2.46 FY25E → $3.51 FY30E). These are single-digit numbers — the blended company is not a fast grower.
- Acceleration is bifurcated. The 2nd derivative is positive inside IET — record orders of $4.9B (third straight quarter above $4B), a 1.5× book-to-bill, and a record $33.1B IET backlog, driven by LNG, gas power generation, and a genuinely new demand vector: electric generators and turbines to power AI data centers (e.g. Boom Supersonic 1.21 GW, a 1 GW North America integrated award, a Google Cloud AI-power collaboration). But the 2nd derivative is negative inside OFSE (revenue $15.6B → $14.3B), so the blended rate stays low-single-digit.
- Room to run: at $52B market cap against large LNG-infrastructure and data-center-power TAMs, there is room — but BKR is one of several incumbents (SLB, HAL, GE Vernova) chasing it, and the OFSE anchor limits how fast the whole re-rates.
- Reinvestment runway: disciplined — ~$1.3B/yr capex, portfolio pruning to fund the IET tilt, and rising FCF ($2.54B FY25, +23% YoY).
Exponential Potential: Low-Moderate (4/10). The honest framing: own BKR for the IET mix-shift and cheap optionality on energy-infrastructure/data-center power, not for exponential compounding. A pure-play on the IET book would score higher; the OFSE half is why the blended score sits at 4.
5. Financials (real numbers — FMP annual/quarterly)
- Revenue: FY25 $27.73B, essentially flat vs FY24 ($27.83B) and up from FY23 ($25.51B). Top line is mature; the story is mix and margin, not top-line growth.
- Segment trajectory: IET $10.15B → $12.20B → $13.41B (FY23→24→25, accelerating); OFSE $15.36B → $15.63B → $14.32B (rolling over). The crossover is coming.
- Quarterly trajectory: Q1'25 $6.43B → Q2 $6.91B → Q3 $7.01B → Q4 $7.39B → Q1'26 $6.59B (+2.5% YoY). Normal seasonal shape; no top-line acceleration.
- Margins (improving): gross 23.6% TTM, EBITDA margin 18.3% TTM, net margin 11.2% TTM — up meaningfully from the loss-making 2020–22 period. Thin vs a software or pharma name, but strong for oilfield equipment and trending up.
- Earnings: net income $2.59B FY25 (GAAP EPS $2.62), vs $2.98B FY24 (FY24 was flattered by a large tax credit) and $1.94B FY23. TTM net income per share ~$3.15. Note: GAAP and adjusted diverge — Q1'26 GAAP EPS $0.93 vs adjusted $0.58 (GAAP boosted by divestiture gains); analyst estimates are on the adjusted basis (FY26E ~$2.39), which is why forward P/E looks higher than trailing.
- Cash flow: FY25 operating CF $3.81B, capex −$1.27B, FCF $2.54B (up from $2.05B FY24) — a ~4.4% FCF yield, capex/OCF a disciplined 36%. Real, growing free cash.
- Balance sheet (a genuine strength): total debt $7.14B, cash + ST investments $4.96B, net debt just $3.43B → net-debt/EBITDA 0.27×; current ratio 2.1×, interest coverage 14×. Investment-grade, lightly levered — this is what caps the downside and is the strongest single fact in the file.
6. Valuation — priced in or room?
On trailing numbers BKR is inexpensive for the market and mid-range for its sector: 16.7× trailing EPS, 1.9× EV/sales, 10.5× EV/EBITDA, 2.7× book, ~4.4% FCF yield, 1.7% dividend yield. The forward path on adjusted consensus is ~22× FY26E → 18× FY27E → 15× FY30E — the trailing-to-forward P/E rises because trailing GAAP EPS was inflated by 2026 divestiture gains, not because the stock is expensive; on a clean adjusted basis the multiple is undemanding and compresses as EPS grows.
The bull case is a re-rating argument: as IET (higher-multiple energy-infrastructure) becomes the majority of the mix, BKR should earn a premium to a pure oilfield-services multiple. The bear case is that cyclicality caps the multiple — the market won't pay up for a company whose larger segment is shrinking and whose earnings track the oil cycle. Street targets (context): consensus $73.2, high $80, low $60 — notably, the entire Street range sits above today's $52.78, implying the sell-side sees the drawdown as an entry. Our base ($60) is more conservative than consensus; we credit the IET story but haircut for OFSE drag and cyclicality. Not a deep-value screamer, but a reasonable price for an improving cyclical.
7. Technicals (computed from EOD price history)
- Trend: broken / down. $52.78 sits below the 50-DMA ($63.41) and below the 200-DMA ($55.61) — a downtrend, not an uptrend. MACD −2.64 (negative).
- Location: −24.2% off the 52-week high ($69.67), +36.5% off the 52-week low ($38.68). This is the max drawdown from peak (−24.2%) — a meaningful correction.
- Momentum: RSI(14) 9.8 — deeply oversold (anything <30 is oversold; sub-10 is extreme). This is a washed-out, capitulation-type reading, which is precisely why the tactical entry is attractive rather than a "wait" — but it also warns that something has spooked the price action near-term.
- Relative strength: BKR +36.4% 12-mo vs SPY +20.6% / QQQ +30.3% (still ahead on a year view), but −12.5% 3-mo vs SPY +13.7% / QQQ +22.0% — sharp recent underperformance is what created the setup.
- Read: the price action is ugly and the trend is down, but an RSI near 10 into a −24% drawdown, against a strong balance sheet and above-consensus Street targets, is a classic oversold-value setup. Scale in; do not expect an immediate V — a base needs to form (a reclaim of the 200-DMA ~$56 would confirm).
8. Moat & competitive position
Baker Hughes's moat is installed base, technology, and scale in two hard-to-enter markets: (1) LNG turbomachinery — it is one of a handful of firms globally that can supply the main-refrigerant compressor trains and gas turbines for LNG mega-trains (e.g. the QatarEnergy North Field West award), a business with decades-long service tails and high switching costs; and (2) large-frame gas power generation now finding a new leg in AI-data-center power (BRUSH generators, NovaLT turbines). OFSE competes in a more commoditized, price-competitive oilfield-services market against SLB and Halliburton, where pricing is ultimately set by customer drilling budgets — a real but cyclical moat. The moat is durable in IET, thinner in OFSE.
Peer set (market cap, from data): the direct oilfield-services comps are SLB $67.5B and Halliburton $27.5B; the broader FMP peer basket skews to the energy/midstream complex — Cheniere (LNG) $51.5B (an LNG customer/adjacency), Diamondback $48.4B, ONEOK $55.3B, MPLX $58.0B, TC Energy $69.2B, Suncor $65.0B, Eni $68.5B, Imperial Oil $56.6B. Against HAL and SLB, BKR's IET franchise is its differentiator — it is less of a pure oilfield-services play than either, which is the whole re-rating thesis; and its 0.27× net leverage is cleaner than most services peers.
9. Management, capital allocation & guidance
- Capital allocation: disciplined and shareholder-friendly — FY25 returned ~$910M in dividends (yield ~1.7%, payout ~29%) and $384M in buybacks, while running net-debt/EBITDA at 0.27×. Active portfolio pruning (Precision Sensors sold to Crane for $1.15B; Waygate to Hexagon for ~$1.45B; surface-pressure-control JV with Cactus for $344.5M; HMH IPO ~$200M) is targeted to raise ~$3B gross in 2026 — funding the IET tilt and de-levering. Sensible mix for a cyclical.
- Insider activity: the recent Form 4s are executive sales — CEO Simonelli exercised options at $35.55 and sold at $58–63 (June 12 & 22), CFO Moghal sold 20,000 shares at $62.38 on 2026-06-15, and Chief Growth & Experience Officer Borras sold 72,000 shares at $55.05 on 2026-07-01. These read as routine option-exercise/10b5-1 diversification (several at prices above today's $52.78), but the cluster of C-suite selling into the decline is worth noting rather than dismissing.
- Management's own guidance (half-weighted — their own book): from the Q1'26 earnings release (SEC 8-K, filed 2026-04-23), management reported Q1 results that "exceeded our guidance range" and stated "our outlook for the business fundamentals remains unchanged, excluding the ongoing impacts in the Middle East." They emphasized record IET orders ($4.9B, third straight quarter >$4B), a 1.5× IET book-to-bill and record $33.1B IET backlog, ~$3B of expected 2026 divestiture proceeds, and framed 2026–2028 as "Horizon 2" — a period of "continued growth, higher margins, and stronger free cash flow." This is management's self-interested framing (half-weight): the backlog and divestiture figures are concrete and verifiable; the "unchanged outlook / structural growth" language is optimistic and should be discounted, especially given the explicitly flagged Middle East disruption.
10. Catalysts & what to watch
- Next earnings: 2026-07-26 (Q2'26; Street EPS $0.50, revenue ~$6.52B). Watch IET orders and book-to-bill (is the backlog still building?) and OFSE revenue/margin (has the decline stabilized?).
- IET backlog conversion: the $33.1B backlog only matters if it converts to revenue and margin on schedule — track quarterly IET revenue recognition.
- Data-center-power orders: new turbine/generator awards for AI data centers (the emerging demand vector) — each is thesis-confirming.
- Oil price / upstream capex: the swing factor for OFSE; a sustained oil decline or producer capex cut is the main bear trigger.
- Divestiture completion: the ~$3B 2026 proceeds and further portfolio pruning — confirmation of the mix-shift discipline.
- Technical stabilization: a reclaim of the 200-DMA (~$56) after the −24% drawdown would firm up the entry.
Thesis tripwires (what would change the call): two consecutive quarters of IET book-to-bill below 1.0×; a sharp oil-driven OFSE revenue drop; net-margin compression back toward single digits; or divestiture proceeds failing to materialize.
11. Key risks
- Cyclicality (structural): BKR's earnings track the oil-and-gas capital-spending cycle; OFSE (52% of revenue) is directly oil-price-levered. A downturn compresses both revenue and multiple at once. This is the dominant risk.
- Middle East disruption: management explicitly flagged "significant disruptions in the Middle East" in Q1'26 — a live geopolitical/operational risk to a key region.
- OFSE secular drag: the larger segment is shrinking; if the energy transition or shale maturity accelerates that, the blended growth and multiple suffer.
- Execution on backlog: the IET thesis depends on converting a record backlog on time and on margin — LNG/power projects are complex and can slip.
- No expert corroboration: unlike our conviction names, BKR has zero Synthos KB coverage — the call is quant/fundamentals-only and carries lower conviction by construction.
- Insider selling into weakness: a cluster of C-suite Form 4 sales in June–July 2026, into a declining stock — likely routine, but a yellow flag. And 72% non-US revenue adds FX/geopolitical exposure.
12. Verdict, position sizing & monitoring
Buy — Tactical. BKR is a cheap (16.7× trailing / 10.5× EV-EBITDA), lightly-levered (net-debt/EBITDA 0.27×) energy-equipment cyclical that is genuinely re-rating toward energy infrastructure — a record $33.1B IET backlog at 1.5× book-to-bill, with LNG and AI-data-center power as real demand vectors, and ~$3B of 2026 divestiture proceeds de-risking the balance sheet. It has sold off 24% into a deeply oversold RSI-10 reading while the entire Street price-target range ($60–$80) sits above the current $52.78. That combination — cheap, sturdy, oversold, with a live growth engine — is a reasonable tactical entry.
But it is not a core holding: growth is only single-digit at the blended level, the larger OFSE segment is shrinking and oil-levered, the trend is broken, and there is no expert-panel conviction behind it. Hence Tactical, not Core.
- Sizing: tactical / satellite, ~1–3% of a portfolio, scaled in (a starter now given the oversold tape; adds on a base forming above the 200-DMA). Not a position to size up as a compounder.
- Monitoring: re-underwrite on the §10 tripwires; formal re-score each earnings print. A reclaim of the 200-DMA (~$56) plus continued IET order strength would be the combination that could upgrade this toward a fuller Buy. This verdict is logged as a tracked Synthos call as of 2026-07-03 at $52.78.
- Single biggest risk: oil-cycle/upstream-capex cyclicality hitting OFSE, compounded by the flagged Middle East disruption.
Provenance & disclosures
- Traceability: 0 KB claims, breadth 0 — there is no expert coverage of BKR in the Synthos knowledge base. This note is fundamentals- and quant-driven; no
claim_ids are cited because none exist for this name. Fabricated conviction is structurally impossible (claim-ID reconciliation), and here we state plainly that conviction breadth is zero. - Data as-of: fundamentals 2026-03-31 (Q1'26) · estimates & prices 2026-07-02/03 · management guidance from the SEC 8-K earnings release filed 2026-04-23. Forward figures are analyst consensus (FMP), labeled as estimates; note GAAP vs adjusted EPS divergence (2026 divestiture gains).
- Management caveat: the Q1'26 release language is management's own self-interested framing, half-weighted by design; concrete backlog/divestiture figures weighted higher than "unchanged outlook" narrative.
- Not investment advice. Independent research, educational and informational only, never personalized. Hypothetical/forward figures are labeled; the only performance numbers Synthos will headline are the live, real-money Flagship's.
- Version: 2026-07-03. Prior versions available via the deep-dive version dropdown ("based on the info at the time").