QS Research · Michael Burry's Scion Capital analyst template · 2006
Baker Hughes Co (BKR)
As of 2026-11-11 · 11/15 boxes filled from SEC filings and market data
Report price $47.77 (close 2026-11-10)
Conclusion: WATCH
Conviction low · base case +160% · downside -28% · upside +27%
The market is not missing the order story: Q3 2026 orders of $10.8B, record $39.4B IET RPO and a raised $50B+ Horizon 2 IET order outlook are public, and the stock still sits 32.2% below its 52-week high because the GAAP line (Q3 diluted EPS $0.41 vs $0.70 adjusted) and $18.26B of debt after $14.15B of deals are what the tape discounts. On post-deal TTM to Sep 30 2026 the company earns a 9.4% ROIC against a 7.7% WACC (+1.7 pts) and a 6.8% FCF yield, but at 12.0x EV/EBITDA (GAAP EBITDA, TTM) and 21.6x adjusted P/E, or 14.4x on operating (tax-normalized) P/E, it is priced with SLB (12.5x) rather than HAL (7.9x). The cases run on P/E: base $124.09, +159.8%, at 42.6x, the peer median P/E (7 peers in the comps table), against today's 14.4x; downside $34.56, -27.7%, at 12.2x, 15% below today's multiple and already at or under the market anchor (20x), with the $0.36 a share exposure stress included; upside $60.67, +27.0%, on FLS's 2.59x EV/Sales. At reward/risk 0.97 the asymmetry runs against the position, so this stays a watch with low conviction: a mispricing may be forming around the GAAP/leverage discount, but the rule is not met.
Key numbers
- Share price: $47.77
- Market cap: $47.44B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $28.74B
- EV / EBITDA (TTM): 12.0x
- P/E (TTM): 16.4x
- FCF yield: 6.8%
- Price / book: 2.36x
- Earnings-quality flags (TTM): Gains/losses on disposals $697.0M (24% of net income)
- P/E, adjusted (TTM): 21.6x
- P/E, operating (tax-normalized) (TTM): 14.4x
- EV / FCF (TTM): 19.1x
- Revenue growth (latest fiscal year): -0.3%
- ROIC (TTM): 9.4%
- WACC: 7.7%
- Economic profit spread: +1.7 pts
The 15 boxes
- ✓ 1. Long-form business notes
Baker Hughes reports two segments, OFSE and IET, with IET carrying most backlog ($32.4B of $35.9B RPO at Dec 31 2025) and FY2025 orders of $29.6B. S24 shows revenue of $20.70B in FY2020 rising to $27.73B in FY2025 and $28.74B TTM to Sep 30 2026, but FY2020 had a $15.98B operating loss and $9.94B net loss; I do not average across the window. For current valuation I use GAAP TTM net income of $2.90B and operating cash flow of $4.51B, not an EBITDA figure, because S24 provides no EBITDA line. S22 describes the Chart deal as pending and expected to close in Q2 2026, so FY2025 figures predate it.
- ○ 2. Competitive advantage
The sources show a scale-driven improvement in operating results — operating income rose from $1.31B on $20.50B revenue in FY2021 to $3.08B on $27.83B in FY2024 — but the 10-K itself claims no durable advantage: it says the business is "highly competitive" and that pricing depends on industry capacity relative to demand and on differentiating its products. Structural leverage sits with suppliers (GE Vernova/GE Aerospace and the Aero JV) and customers (national oil companies that control reserves and demand local content), not with Baker Hughes. Cash conversion is the strongest quantitative evidence of a real cost/scale position: TTM to 2026-09-30 operating cash flow of $4.51B against $1.28B capex. FY2025 and TTM operating income are not in the data, so the margin record stops at FY2024.
- ✓ 3. 10-Q takeaways
Q3 2026 (post-Chart, closed July 16, 2026) revenue was $8,025M, up 14% YoY, but $0.9B came from Chart while OFSE was flat and IET +3%; orders were $10,764M and RPO $46.4B. GAAP attributable net income was $411M and GAAP diluted EPS $0.41; adjusted EBITDA (release non-GAAP) was $1,415M and adjusted diluted EPS $0.70. Cash flow was $1,005M CFO and $769M FCF in Q3, no 2026 buybacks, and the release raised the IET order outlook to $50B+ for Horizon 2; the 10-Q risk-factor section points back to the 2025 Annual Report rather than adding a new one.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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