Baker Hughes Third Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Baker Hughes (NYSE:BHI) will unveil its latest earnings on Friday, October 19, 2012. Baker Hughes provides products and services for the drilling and evaluation of oil and gas wells as well as fluids and chemicals and reservoir technology.

Baker Hughes Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 84 cents per share, a decline of 28.8% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 90 cents. Between one and three months ago, the average estimate moved down. It also has dropped from 89 cents during the last month. Analysts are projecting profit to rise by 13.6% versus last year to $3.63.

Past Earnings Performance: The company is looking to top estimates for the third straight quarter. Last quarter, it reported net income of $1 per share against a mean estimate of profit of 78 cents, and the quarter before, the company exceeded forecasts by 3 cents with net income of 86 cents versus a mean estimate of profit of 83 cents.

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A Look Back: In the second quarter, profit rose 29.9% to $439 million ($1 a share) from $338 million (77 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 12.3% to $5.33 billion from $4.74 billion.

Stock Price Performance: Between September 17, 2012 and October 15, 2012, the stock price dropped $5.15 (-10.3%), from $50.10 to $44.95. The stock price saw one of its best stretches over the last year between September 10, 2012 and September 17, 2012, when shares rose for six straight days, increasing 7.4% (+$3.45) over that span. It saw one of its worst periods between September 17, 2012 and September 26, 2012 when shares fell for eight straight days, dropping 9.4% (-$4.73) over that span.

Wall St. Revenue Expectations: On average, analysts predict $5.46 billion in revenue this quarter, a rise of 5.4% from the year-ago quarter. Analysts are forecasting total revenue of $21.79 billion for the year, a rise of 9.9% from last year’s revenue of $19.83 billion.

Key Stats:

The company enters this earnings announcement with substantial revenue momentum. The company has averaged year-over-year revenue growth of 19.9% over the last four quarters.

Last quarter’s earnings rise was a switch from preceding drops, so the upcoming earnings announcement is a chance to build on last quarter’s result. After net income declines in the fourth quarter of the last fiscal year and first quarter, profit rose in the second quarter.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.47 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 2.63 in the first quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 9.7% to $4.24 billion while assets rose 2.7% to $10.45 billion.

Analyst Ratings: There are 12 out of 23 analysts surveyed (52.2%) rating Baker Hughes a buy.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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