Yahoo Finance Results: Baker Hughes Company Exceeded Expectations And The Consensus Has Updated Its Estimates
As you might know, Baker Hughes Company (NASDAQ:BKR) recently reported its quarterly numbers. It looks like a credible result overall - although revenues of US$6.4b were in line with what the analysts predicted, Baker Hughes surprised by delivering a statutory profit of US$0.45 per share, a notable 14% above expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Baker Hughes
Taking into account the latest results, the consensus forecast from Baker Hughes' 23 analysts is for revenues of US$27.6b in 2024. This reflects an okay 5.1% improvement in revenue compared to the last 12 months. Per-share earnings are expected to expand 17% to US$2.14. In the lead-up to this report, the analysts had been modelling revenues of US$27.5b and earnings per share (EPS) of US$2.02 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$40.45, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Baker Hughes analyst has a price target of US$45.00 per share, while the most pessimistic values it at US$34.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Baker Hughes is an easy business to forecast or the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Baker Hughes' rate of growth is expected to accelerate meaningfully, with the forecast 6.9% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 0.8% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 7.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Baker Hughes is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Baker Hughes' earnings potential next year. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$40.45, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Baker Hughes analysts - going out to 2026, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for Baker Hughes that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
