BKR - Embedded Expectations Analysis - 2020 11 16
Baker Hughes Company (BKR:USA) currently trades at a historical low relative to UAFRS-based (Uniform) assets, with a 1.3x Uniform P/B. At these levels, the market has bearish expectations for the firm, and management may be concerned about their restructuring cost initiatives, their ability to sustain operating income, and their Petrobas and C3.ai partnershipSpecifically, management may lack confidence in their ability to further divest low performing businesses, build strong momentum for their offshore flexible pipe business, and execute their restructuring cost initiatives in Oilfield Equipment. Furthermore, they may have concerns about their ability to sustain tailwinds from these initiatives, the sustainability of natural gas demand, and the potential of their contract with Petrobas. Management may also lack confidence in their ability to sustain working capital and operating income, and their ability to continue developing their other leading technologies in Digital Solutions. Moreover, they may have concerns about the potential of the BHC3 partnership with C3.ai and the repercussions of selling their Specialty Polymers business
Baker Hughes is an energy technology company. The company's segments are: Oilfield Services, which provides products and services for onshore and offshore operations ranging from drilling, evaluation, completion, production, and intervention; Oilfield Equipment, which provides products and services for the subsea, offshore surface and onshore operating environments; Turbomachinery and Processing Solutions, which provides equipment and related services for mechanical-drive, compression and power-generation applications; and Digital Solutions, which includes condition monitoring, industrial controls, non-destructive technologies, measurement, sensing, and pipeline solutions.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.