Baker Hughes Co is an industrial energy-services and equipment provider that combines equipment, services and digital solutions and presents a conservative balance-sheet profile with debt-to-equity of 0.7979 and a current ratio of 1.5915.
The company shows several operating strengths: trailing twelve‑month net income has recovered to $2.98B as of 2024‑12‑31 and recent quarterly net income reached $930.0M (2026‑03), while quarterly revenue has been steady around $6.00B (most recent quarter), underscoring revenue scale and earnings recovery [Revenue & Net Income]. Liquidity and solvency metrics are robust, with interest coverage at 15.1751 and net debt below the three‑times owner‑earnings threshold, supporting debt service capacity and a manageable leverage profile (debt/equity 0.7979) [Return on Equity (ROE)]. Cash generation shows positive operating cash flow on a trailing twelve‑month basis of $1.89B (2022‑12‑31) even as the business continues to invest, providing room for capital allocation choices [Strategic Capital Allocation] and consistent net‑income stability measured at 4.49 (avg/stdev), which indicates predictable reported earnings over the sample period [Earnings Quality Analysis].
There are notable areas of concern. Reported margins display a pronounced disconnect: gross margin in the most recent quarter was 123.7% (2025‑06‑30) while operating margin swung to –84.5% the same quarter and trailing net profit margin was –12.1% at 2024‑12‑31, highlighting volatility in cost absorption and operating results [Profit Margin Trends]. Cash conversion also merits attention: the latest Net Income TTM of $2.98B exceeds the most recent Operating Cash Flow TTM of $1.89B, and investing and financing outflows remain sizable (Investing CF TTM –$857.0M; Financing CF TTM –$1.53B), which could pressure free‑cash‑flow flexibility [Strategic Capital Allocation].
Key fundamentals to watch going forward include operating cash flow versus net income (currently $1.89B vs $2.98B), the reconciliation between elevated gross margin (123.7%) and negative operating margin (–84.5%), trends in ROE (14.0% TTM at 2024‑12‑31), leverage and interest coverage (debt/equity 0.7979; interest coverage 15.1751), and quarterly EPS and revenue per share trends alongside the company’s reported PE multiple movement as captured in EPS Diluted & Revenue per Share, Revenue & EPS Growth, and Price-to‑Earnings (PE) Ratio Trend.
The foundation of business quality and long-term value creation
Baker Hughes Co's reported revenue in recent quarters has settled around the mid-single-digit billions. Revenue rose to $6.00B in the quarter ended 2026-03, following $5.98B (2025-06) and $5.49B (2025-03), showing a generally stable top line in the most recent periods. The series includes a sharp negative outlier of −$28.24B in 2024-12, which contrasts with surrounding quarters that are positive and in the $3.6B–$6.0B range.
Net income has shown recovery and variability over the last several quarters. After several quarters of positive profits through 2023–2024, net income peaked at $1.18B in 2024-12, declined to $609.0M in 2025-09, and most recently increased to $930.0M in 2026-03. The most recent quarterly revenue was $6.00B and the most recent quarterly net income was $930.0M.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Jul 2024 to Jun 2025, Baker Hughes Co generates $-13.19B in revenue. The waterfall below shows how revenue flows through various expense categories.
Period Information
Report Type: Annual (10-K)
Period: Jul 2024 to Jun 2025
Analyzing long-term margin stability and competitive positioning
Baker Hughes Co's gross margin shows elevated and variable levels over the periods shown. Gross margin fell from 207.6% at year-end 2019 to 100.4% at year-end 2024, then increased to 123.7% in the most recent quarter (period ending 2025-06-30), indicating a notable decline from 2019 followed by a partial recovery in the latest reported quarter.
Understanding Profit Margins
Between Jul 2024 and Jun 2025, Baker Hughes Co converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Baker Hughes Co's trailing twelve-month net income rose through 2024, moving from $1.82B at 2024-03-31 to $1.99B at 2024-06-30, $2.24B at 2024-09-30 and reaching $2.98B at 2024-12-31. The most notable inflection in the series is the sharp increase between the 2024-09-30 and 2024-12-31 periods.
Operating cash flow (TTM) data in the provided series is older, showing $1.76B at 2018-12-31, a decline to $1.30B at 2020-12-31, and a recovery to $1.89B at 2022-12-31. Comparing the latest available points in the dataset, the most recent Net Income TTM ($2.98B at 2024-12-31) exceeds the most recent Operating Cash Flow TTM ($1.89B at 2022-12-31).
Most recent Net Income (TTM): $2.98B
Most recent Operating Cash Flow (TTM): $1.89B
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Baker Hughes Co's trailing twelve-month Return on Equity has shown recovery and volatility across the reported periods. ROE rose from 0.6% at 2019-12-31 to 11.8% by 2024-03-31, then fell to 6.3% at 2024-09-30 before rebounding to 14.0% at 2024-12-31. Key inflection points are the substantial increase between 2019 and March 2024, the mid-2024 decline in September, and the strong rebound by year-end 2024.
The most recent level indicates the company returned 14.0% on shareholder equity over the trailing twelve months ended 2024-12-31. The most recent trailing twelve-month ROE was 14.0%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Baker Hughes Co’s trailing-twelve-month cash flows show continued positive operating cash generation in the latest available operating figure, with operating cash flow TTM reported at $1.89B as of period end 2022-12-31.
Investing cash flows have been consistently negative; the most recent investing observations show an outflow that increased slightly from -$817.0M at 2023-12-31 to -$857.0M at 2024-03-31.
Financing cash flow is also a net outflow in the most recent data, with a TTM financing outflow of -$1.53B reported at 2024-12-31; earlier periods include a larger financing outflow of -$4.36B at 2018-12-31 and similar $-1.53B readings in 2019.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.