Baker Hughes, Inc. (BHI) continues to trade in elevated territory near its 52-week high after reporting strong Q1 results in late April that came in ahead of expectations. With an average earnings surprise of 14% over the last four quarters and bullish 29% growth projection, this Zacks #1 rank stock is an energetic pick for momentum.
Company Description
Baker Hughes, Inc. operates as an on-shore drilling and oil-field services provider. The company operates both domestically and internationally and has a market cap of $32 billion.
Oil-field service providers have been experiencing strong demand for their services over the last few months as exploration and production companies increase capital spending to take advantage of high crude prices. That dynamic lifted BHI to strong Q1 results from late April that came in well ahead of expectations.
First-Quarter Results
Revenue for the period was up 78% from last year to $4.53 billion. Earnings also looked good, coming in at 87 cents, 12% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 14% over the last four quarters.
The good quarter was driven by the execution of Baker Hughes strategy to improve its margins through cost cutting and increased efficiency, saying it advanced towards its goal of exiting 2011 with international margins in the mid teens.
On a longer-term basis, the company noted that ongoing global supply disruptions and increasing demand from emerging markets should drives sales and earnings for years to come.
Financial Profile
Coming out of the quarter, Baker Hughes’ total debt fell $44 million to $3.84 billion while cash and short-term investments were down $311 million to $1.4 billion as capital spending climbed to $429 million.
Estimates
We saw some pretty solid movement in estimates off the good quarter, with the current adding 21 cents to $4.09 while the next-year estimates added 50 cents to $5.29, a bullish 29% growth projection.
Valuation
But in spite of the nice gains, the valuation picture still looks great, with a PEG ratio of .62, well below the value benchmark of 1.
12-Month Chart
On the chart, BHI spiked into a new 52-week high on the good quarter. Look for support from the longer-term trend on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
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