Last week saw the newest first-quarter earnings release from Baker Hughes Company (NASDAQ:BKR), an important milestone in the company's journey to build a stronger business. It looks like a credible result overall - although revenues of US$6.4b were in line with what the analysts predicted, Baker Hughes surprised by delivering a statutory profit of US$0.45 per share, a notable 14% above expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Baker Hughes after the latest results.
Taking into account the latest results, the consensus forecast from Baker Hughes' 23 analysts is for revenues of US$27.6b in 2024. This reflects a reasonable 5.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to ascend 17% to US$2.14. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$27.5b and earnings per share (EPS) of US$2.02 in 2024. So the consensus seems to have become somewhat more optimistic on Baker Hughes' earnings potential following these results.
The consensus price target was unchanged at US$40.45, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Baker Hughes analyst has a price target of US$45.00 per share, while the most pessimistic values it at US$34.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Baker Hughes is an easy business to forecast or the the analysts are all using similar assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Baker Hughes' growth to accelerate, with the forecast 6.9% annualised growth to the end of 2024 ranking favourably alongside historical growth of 0.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.8% annually. Baker Hughes is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Baker Hughes' earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$40.45, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Baker Hughes going out to 2026, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 1 warning sign for Baker Hughes you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.