BAKER HUGHES CO (NASDAQ:BKR) – A Potential Fit for GARP Investors

Baker Hughes Co (NASDAQ:BKR) emerged from our Peter Lynch-inspired stock screen as a candidate for long-term investors seeking growth at a reasonable price (GARP). The company, a provider of oilfield services and energy technology solutions, demonstrates solid fundamentals that align with Lynch’s investment principles. Below, we examine why BKR stands out.

Key Strengths

• Earnings Growth: BKR has delivered a strong 5-year average EPS growth of 23.35%, comfortably within Lynch’s preferred range of 15-30%. This suggests sustainable expansion rather than overheated growth.
• Profitability: The company’s return on equity (ROE) of 17.01% exceeds Lynch’s 15% threshold, indicating efficient use of shareholder capital.
• Financial Health: With a debt-to-equity ratio of 0.35, BKR maintains a conservative capital structure, well below Lynch’s upper limit of 0.6.
• Liquidity: A current ratio of 1.34 shows the company can meet short-term obligations, though it lags behind some industry peers.

Valuation Considerations

While BKR’s PEG ratio of 6.17 is elevated—suggesting the market prices in higher growth expectations—its P/E ratio of 15.47 remains below the S&P 500 average, offering relative value. The company’s dividend yield of 2.44% adds income appeal, supported by a 10-year track record of payouts.

Fundamental Snapshot

Our full analysis rates BKR 5/10, noting strengths in profitability and dividends but flagging valuation concerns. The energy equipment sector faces cyclical pressures, yet BKR’s diversified operations and improving margins could buffer risks.

For investors building a diversified GARP portfolio, BKR warrants further research. Explore more candidates using our Peter Lynch Strategy screener, updated daily.

Disclaimer

This is not investing advice. Always conduct your own analysis before making investment decisions.