BKR, Baker Hughes Co
Baker Hughes Company is an energy technology company with a diversified portfolio of technologies and services that span the energy and industrial value chain.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- Revenue is Products (64%) and Services (36%).
- Situation
- Cyclical. margins collapse repeatedly across the cycle, a single year misleads; look at normalized, through-cycle earnings and the balance sheet at the trough.
- What moves the needle
- How hard the assets work, and what the inputs cost. What decides it: utilization, how much of the capex merely keeps the assets running, and what a downturn does to a heavy fixed-cost base.
- Is it a good business?
- Return on capital has rarely cleared the cost of capital (median 2%, above 15% in 0 of 10 years). Owner earnings agree: roughly 4% of revenue reaches owners as cash, though it swings. The cycle and the balance sheet decide this one, so weigh the worst year against the median, and read the 10-K.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →Revenue spreads across 2 segments, the largest Oilfield Services And Equipment at 56%.
- Oilfield Services And Equipment56%$15.6B
- Industrial And Energy Technology44%$12.2B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $13.1B | $17.2B | $22.9B | $23.8B | $20.7B | $20.5B | $21.2B | $25.5B | $27.8B | $27.7B | $27.9B |
| Operating marginOp. mgn | 3.5% | −1.7% | 3.1% | 4.5% | −77.2% | 6.4% | 5.6% | 9.1% | 11.1% | 10.2% | 11.0% |
| Net incomeNet inc. | $0 | ($103M) | $195M | $128M | ($9.9B) | ($219M) | ($601M) | $1.9B | $3.0B | $2.6B | $3.1B |
| EPS (diluted)EPS | — | — | — | — | — | — | — | — | — | — | $4.03 |
| Owner earningsOwner earn. | ($162M) | ($1.5B) | $767M | $886M | $330M | $1.5B | $899M | $1.8B | $2.1B | $2.5B | $2.3B |
| ROICROIC | 2% | -1% | 1% | 2% | -61% | 3% | 4% | 8% | 12% | 10% | 9% |
| CapexCapex | $424M | $665M | $995M | $1.2B | $974M | $856M | $989M | $1.2B | $1.3B | $1.3B | $1.3B |
| Capex / revenueCapex/rev | 3.2% | 3.9% | 4.3% | 5.2% | 4.7% | 4.2% | 4.7% | 4.8% | 4.6% | 4.6% | 4.7% |
| Capex vs depreciationCapex/dep | 0.77× | 0.60× | 0.67× | 0.87× | 0.74× | 0.77× | 0.93× | 1.13× | 1.13× | 1.07× | 1.04× |
| Total debtDebt | $277M | $8.3B | $7.2B | $6.6B | $7.6B | $6.7B | $6.7B | $6.0B | $6.0B | $6.1B | $16.2B |
| Cash & investmentsCash+inv | $981M | $7.0B | — | — | — | — | — | — | — | — | $5.6B |
| Net debt / (cash)Net debt | ($704M) | $1.3B | $7.2B | $6.6B | $7.6B | $6.7B | $6.7B | $6.0B | $6.0B | $6.1B | $10.5B |
Owner’s Scorecard
Will it survive?
- No meaningful interest burdenLittle or no interest expense reported
Little or no interest expense reported, the business isn't leaning on lenders to operate.
- ConservativeTotal debt $6.1B ÷ operating income $3.1B
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash +$936MNet cashCash $7.0B − debt $6.1B
Cash and short-term investments exceed every dollar of debt by $936M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Not enough data
The filing data didn't include the inputs for this check.
Is it a good business?
- HighNOPAT $2.8B ÷ invested capital $17.9B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- SolidOwner Earnings $2.5B = operating cash $3.8B − capex $1.3B
What an owner could take out without starving the business. That's 9% of revenue. Treating stock comp as the real expense it is (less $203M of SBC) leaves $2.3B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $3.8B ÷ net income $2.6B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns about halfDividends + buybacks $1.3B ÷ Owner Earnings $2.5B
Of $2.5B Owner Earnings, $1.3B (51%) went back to shareholders, $910M dividends, $384M buybacks. Net of $203M stock comp, the real buyback was about $181M. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 1.07×MaintainingCapex $1.3B ÷ depreciation $1.2B
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 5 of 10
Lost money in 5 year(s), look at what happened there before trusting the average.
- Return on capital ≥ 15% 0 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 3% (FY2016) → 10% (FY2025)
Margins widened over the record, pricing power intact or improving.
- Reinvestment, incremental ROIC 45%
Every extra dollar the company reinvested earned a high return, it is still compounding, not coasting on an old moat.
- Worst year 2020 · −77.2% op. margin
Operations went underwater in 2020, understand why before trusting the good years.
- Dividend record rising
Paid and raised the dividend across the record, the continuity Graham prized.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $19.1B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a reinvestor, most operating cash is plowed back into the business.
- Reinvested$9.9B · 52%
- Dividends$5.2B · 27%
- Buybacks$3.2B · 17%
- Retained (debt / cash)$771M · 4%
It reinvested $9.9B (52%) back into the business and returned $8.4B (44%) to owners, $5.2B in dividends, $3.2B in buybacks. Total debt rose $15.9B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
read the proxy →Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- CEO pay ratio310:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio isn't proof of anything, some businesses are genuinely top-heavy in scarce skill, but a runaway figure is where Buffett starts asking whether the board is doing its job or just keeping the chair company.
- Stock-based compensation$203M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 7% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
2 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $27.7B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 1.36×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt NearDebt ≤ working capital · $6.1B vs $5.0B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability MissA profit every year (10-yr record) · 5 loss years
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record NearUninterrupted dividends · 9 of 10 yrs
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth PassEarnings +33% over the record · +8063%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. . Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Baker Hughes Co has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $2.3B on 773M diluted shares; net debt $10.5B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Pricing power & competitionBusiness
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“A continued commitment to service delivery, HSE standards, technical proficiency, and competitive pricing are also key factors in its success.”
From the recordOperating margin11.0% (TTM), near a 10-yr high - Concentrated dependenceRisk Factors
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Demand for our services and products is highly correlated with global economic growth and substantially dependent on the levels of expenditures by our customers.”
From the recordOwner-earnings margin at stake (TTM)8% - Litigation & contingenciesBusiness
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“In some cases, our remediation activities are conducted as specified by a government agency-issued consent decree or agreed order.”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandRisk Factors
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“Specifically, for example, past oil and natural gas industry downturns have resulted in reduced demand for oilfield products and services and lower expenditures by our customers, which in the past has resulted, and may in the future result, in a prolonged reduction in oil and natural gas prices that…”
From the recordWorst year on record−77.2% operating margin (FY2020) - Regulation & policyRisk Factors
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many emissions matters.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “We expect to make additional acquisitions and strategic investments in the future but may not find suitable targets, or we may not be able to consummate such transactions due to, among other things, financial constraints, unfavorable credit markets, commercially unacceptable terms, failure to obtain…”
- “Regulatory disclosure requirements related to sustainability matters and future legislation and regulatory programs to address climate change or reduce emissions of GHGs may continue to increase our cost and burden of compliance or may subject us to potential legal and reputational risk, which could…”
- “Such changes could include the delay, modification or reversal of climate change-related regulations and initiatives; slower-than-anticipated adoption of renewable energy technologies; continued or increased reliance on oil and natural gas as primary energy sources; and reduced near-term demand from…”
- “Changes to tax laws and associated positions (including tax rate and adverse positions taken by taxing authorities) and international trade policy (including the imposition of tariffs and other import and export regulations) in the countries where we operate could have a material adverse impact on o…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Industrial machinery
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| CATCaterpillar Inc | $67.6B | 100% | 16.5% | 20% | 13% |
| BKRBaker Hughes Co | $27.7B | 66% | 11.1% | 16% | 9% |
| DOVDover Corp | $8.1B | 40% | 17.0% | 11% | 14% |