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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
BKR — frequently asked questions
Is Baker Hughes Company overvalued?
In our latest published analysis dated 2026-05-20, BKR looks meaningfully overvalued. The price recorded at analysis is USD 66.7 versus our fair value of USD 53.3; the high endpoint is presented separately as potential value of USD 67.6. That implies roughly 20.2% downside to fair value at that date.
Our latest published report, analyzed 2026-05-20, gives BKR a fair value of USD 53.3 and a potential value of USD 67.6. The conclusion is triangulated across multiple valuation models and weighted by reliability for Baker Hughes Company's archetype; it is a dated research output, not a live price.
Should I buy BKR now?
Our latest published rating for BKR, analyzed 2026-05-20, is Sell. Baker Hughes Company looks meaningfully overvalued at the analysis-date price of USD 66.7 versus fair value of USD 53.3; potential value is USD 67.6. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for BKR?
The dedicated bear-case section in our report analyzed 2026-05-20 documents Baker Hughes Company's material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is BKR's rating?
Our latest published rating for BKR, analyzed 2026-05-20, is Sell, with a published moat assessment of 6.5/10 (Narrow). It reflects our fair value of USD 53.3, the potential value of USD 67.6, and the price recorded at analysis (USD 66.7).
Bull: Global acceleration in LNG export capacity and deep-water developments act as twin super-cycles, driving protracted top-line growth and long-term multiple expansion as BKR transitions from a legacy OFS firm to a diversified energy transition play.
Main risk
Cyclical Downcycle: Commodity prices correct sharply, halting global E&P budgets and driving OFS margins back to cyclical troughs.
Baker Hughes possesses a bifurcated profile. Its traditional OFS segment is subject to intense E&P capital cyclicality, while its IET segment offers a structural growth tailwind via LNG and compression tech. At current valuations, the market is pricing in sustained execution.
Baker Hughes possesses a bifurcated profile. Its traditional OFS segment is subject to intense E&P capital cyclicality, while its IET segment offers a structural growth tailwind via LNG and compression tech. At current valuations, the market is pricing in sustained execution.
Industrial & Energy Technology (IET)
Industrial & Energy Technology (IET) segment acts as a structural differentiator with LNG and compression technology leadership.
Traditional Oilfield Services (OFS) segment
Traditional Oilfield Services (OFS) segment possesses global scale but suffers from high capital intensity and E&P cyclicality.
Cycle upside
Twin super-cycles in LNG export capacity expansion and deep-water offshore developments drive protracted top-line growth.
Baker Hughes Company provides a portfolio of technologies and services to energy and industrial value chain. Its Oilfield Services & Equipment segment designs and manufactures exploration, appraisal, development, production, rejuvenation, and decommissioning products and related services for onshore and offshore oilfield operations. This segment also provides drilling services, drill bits, and drilling and completions fluids; completions, intervention, measurements, pressure pumping, and wireline services; artificial lift systems, and oilfield and industrial chemicals; subsea projects and services, flexible pipe systems, and surface pressure control systems; and integrated well services and solutions. It serves oil and natural gas companies; the United States and international independent oil and natural gas companies; national or state-owned oil companies; engineering, procurement, and construction contractors; geothermal companies; and other oilfield service companies. The company's Industrial & Energy Technology segment offers gas technology equipment, such as drivers, driven equipment, and turnkey solutions for the mechanical and electric-drive, compression, and power-generation applications; aftermarket support and uptime gas technology services; non-destructive testing technologies, software, and services; pre-commissioning and maintenance services; flow control and safety solutions; mechanical and electromechanical gear transmission systems; Cordant, a software solution to optimize assets, processes, and energy use; Bently Nevada, a sensing and protection hardware for rack-based vibrating monitoring equipment and sensors; and climate technology solutions. It serves industrial, upstream, midstream, downstream, onshore, offshore, and small-to-large scale customers. The company was formerly known as Baker Hughes, a GE company and changed its name to Baker Hughes Company in October 2019. The company was incorporated in 2016 and is based in Houston, Texas.
A sustained dip in global commodity prices combined with delays in massive LNG project FIDs forces severe E&P spending cuts, crushing order backlogs, compressing margins, and contracting the valuation multiple back to historical OFS lows.
The highlighted base cell is anchored to valuation synthesis sensitivity reference ($53.28). It is the reference value for this grid, not a separate standalone fair-value claim.
FCFFDCF remains positive at the base case: base FCFF $2.8B after capex $1.2B, with at 60.9% of . No cliff is projected unless capex/ or materially resets.
Twin super-cycles in LNG and deep-water developments.
Long-term multiple expansion reflecting transition to diversified energy play.
§7 Earnings decision tree
Beat
Hold or add selectively
Trigger: Upside surprise
If IET backlog grows >10% Y/Y, intrinsic value shifts upward and multiple expands; if OFS margins contract >200bps, cyclical downside scenarios dominate.
In-line
Hold
Trigger: In-line results
If IET backlog grows >10% Y/Y, intrinsic value shifts upward and multiple expands; if OFS margins contract >200bps, cyclical downside scenarios dominate.
Miss
Reassess
Trigger: Downside surprise
If IET backlog grows >10% Y/Y, intrinsic value shifts upward and multiple expands; if OFS margins contract >200bps, cyclical downside scenarios dominate.
Current phase requires steady maintenance capex (4.5% of revenue) with normalized investment, avoiding heavy growth capital while yielding robust cash conversion.
Bull cycle
Twin super-cycles in LNG export capacity expansion and deep-water offshore developments drive protracted top-line growth.
Bear cycle
Macroeconomic slowing reduces global energy demand, causing a sudden pullback in upstream E&P spending and severe backlog contraction.
Positioning
Current phase requires steady maintenance capex (4.5% of revenue) with normalized investment, avoiding heavy growth capital while yielding robust cash conversion.
§11 Position management
Sizing
Underweight given the 20% downside to base fair value and extreme cyclicality of the legacy OFS segment.
Risk
Trim positions on transient peak-earnings rallies approaching the $70 internal valuation cross-checks.
Entry tranches
Level
Action
Why
Current / pullbacks
Wait for cyclical multiple compression towards 14x terminal assumptions or price approaching the $45 downside support level.
§12 Investor perspectives
Bull view
Buy
Upside case depends on the report valuation range and named growth catalysts.
Base view
Sell
The stock trades at a severe premium to mid-cycle intrinsic value. Forward expectations heavily capitalize near-term peak EPS and do not fully reflect cyclical compression risks.
§14 Final recommendation
Action
Sell
Sell. The current $66.73 price implies a 25% premium over our $53.27 compositefair value, relying too heavily on peak cyclical margins and uninterrupted LNG super-cycles.
Reassess the thesis against the named valuation, risk, and quarterly checkpoint evidence in this report.
§15Your notes
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
Private notes
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6.5 / 10
$40.10
Sustained dip in commodity prices.
Severe E&P spending cuts and LNG deferrals.
A sustained dip in global commodity prices combined with delays in massive LNG project FIDs forces severe E&P spending cuts, crushing order backlogs, compressing margins, and contracting the valuation multiple back to historical OFS lows.
Ways this thesis can break
Cyclical Downcycle
35%· Medium
Commodity prices correct sharply, halting global E&P budgets and driving OFS margins back to cyclical troughs.
FV impact
$32.19 (Forward Earnings Anchor)
Trigger
12-24 Months
LNG FID Freeze
25%· Medium
Global LNG oversupply concerns cause widespread FID delays, starving the IET segment of its primary structural growth tailwind.
FV impact
$40.10 (Downside Base)
Trigger
24-36 Months
Margin Contraction
15%· Low
Inability to maintain 12.28% operating margins due to sticky inflation and pricing pressure in long-term OFS contracts.
FV impact
$45.00
Trigger
12 Months
Early-warning signals to monitor
The five developments that would weaken our investment case.
01
Industrial Energy Technology Order Intake
A trailing book-to-bill ratio below parity signals that multi-year backlog replenishment is decelerating, weakening visibility into higher-margin equipment deliveries and threatening structural long-term revenue expansion.
Current:Revenue growth was -0.3% for the period ended 2025-12-31.
Alert ifIET segment book-to-bill ratio falls below 1.0x for two consecutive quarters.
02
Return on Capital Contraction
Erosion in economic return on capital reflects cyclical pricing pressures and sluggish capital utilization across oilfield equipment lines, undermining valuation support and forcing multiple contraction toward trough historical ranges.
Current:ROIC was 9.8% as of the report's 2026-05-20 analysis date.
Alert ifROIC declines below 7.0% over any trailing twelve-month period.
Weakening cash generation relative to reported net income indicates that capital is becoming trapped in unbilled project inventories and receivables, constraining free cash flow available for shareholder distributions.
Alert ifOperating cash flow to ratio falls below 1.00x across any trailing twelve-month period.
04
Global LNG Project Sanctioning Delays
Project deferrals by global LNG developers compress future turbomachinery order flows, removing the primary catalyst for multi-year backlog growth and depressing medium-term equipment delivery margins.
Current:Revenue was $27.73B for the period ended 2025-12-31.
Alert ifFiled postponement or cancellation of final investment decisions on more than two major global LNG export facilities over any twelve-month period.
Slipping below double-digit operating margins indicates that pricing concessions and cost inflation across oilfield services are overwhelming operational efficiencies, impairing profitability and eroding normalized earnings resilience.
Current:Operating margin was 12.8% for the period ended 2025-12-31.
Alert ifOperating margin declines below 10.0% for two consecutive fiscal quarters.
—
Industrial & Energy Technology (IET) segment acts as a structural differentiator with LNG and compression technology leadership.
Moderate
02Traditional Oilfield Services (OFS) segment possesses global scale but suffers f — Traditional Oilfield Services (OFS) segment possesses global scale but suffers from high capital intensity and E&P cyclicality.Moderate
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and terminal value at , then adjust for signed per current share.
Global acceleration in LNG export capacity and deep-water developments act as twin super-cycles, driving protracted top-line growth and long-term multiple expansion as BKR transitions from a legacy OFS firm to a diversified energy transition play.
Terminal P/E of 14x reflects necessary cyclical conservatism.
At current valuations, the market is pricing in sustained execution and a steady energy transition cycle. Structural application of a 14x terminal P/E and a 35% probability assignment to cyclical contraction bridges the gap between peak-cycle spot estimates and mid-cycle intrinsic realities.
If IET backlog grows >10% Y/Y, intrinsic value shifts upward and multiple expands; if OFS margins contract >200bps, cyclical downside scenarios dominate.
Metrics to watch into the print
01
Metric:
Industrial Energy Technology Order Intake
CurrentRevenue growth was -0.3% for the period ended 2025-12-31.
Why it matters
Warning level: IET segment book-to-bill ratio falls below 1.0x for two consecutive quarters. A trailing book-to-bill ratio below parity signals that multi-year backlog replenishment is decelerating, weakening visibility into higher-margin equipment deliveries and threatening structural long-term revenue expansion.
02
Metric:
Return on Capital Contraction
CurrentROIC was 9.8% as of the report's 2026-05-20 analysis date.
Why it matters
Warning level: ROIC declines below 7.0% over any trailing twelve-month period. Erosion in economic return on capital reflects cyclical pricing pressures and sluggish capital utilization across oilfield equipment lines, undermining valuation support and forcing multiple contraction toward trough historical ranges.
Warning level: Operating cash flow to net income ratio falls below 1.00x across any trailing twelve-month period. Weakening cash generation relative to reported net income indicates that capital is becoming trapped in unbilled project inventories and receivables, constraining free cash flow available for shareholder distributions.
04
Metric:
Global LNG Project Sanctioning Delays
CurrentRevenue was $27.73B for the period ended 2025-12-31.
Why it matters
Warning level: Filed postponement or cancellation of final investment decisions on more than two major global LNG export facilities over any twelve-month period. Project deferrals by global LNG developers compress future turbomachinery order flows, removing the primary catalyst for multi-year backlog growth and depressing medium-term equipment delivery margins.
