Baker Hughes Company BKR
Verdict: Hold. Fair value $49.72 against a price of $49.97 on 12 Jan 2026.
In plain words
The case for: Narrow competitive moat provides durability. Industry tailwinds with growing market. Strong and sustainable dividend payout.
The case against: Intense competitive pressure could compress margins. Net Income was negative in 2021/2022 while OCF remained positive, indicating significant past.... Growth slows.
Main risks
- Thin revenue cushion: 0.3% decline causes EBIT loss
- High cyclicality tied to energy prices and global capex cycles, making long-term performance difficult to predict.
- Sustainability of current high margins is questionable given the recent history of losses (2021-2022); current performance may represent peak-cycle profitability.
- Free cash flow conversion from 2024 net income is moderate at approximately 70% ($2.05B FCF vs $2.98B NI), indicating significant capital reinvestment needs.
- Intense competitive environment