Breaking Down Baker Hughes Company (BKR) Financial Health: Key Insights for Investors

You're looking at Baker Hughes Company (BKR) and trying to figure out if its energy transition story is defintely strong enough to offset the oilfield cycle volatility. The short answer is: the Industrial & Energy Technology (IET) segment is carrying the weight, but you still need to watch the margins. In the third quarter of 2025, the company pulled in $7.01 billion in revenue, and its trailing twelve months (TTM) net income hit $2.891 billion, a solid 29.12% year-over-year increase, so things look good on the surface. But, the real story is the record IET backlog, which now stands at $32.1 billion-that's your long-term visibility. The catch is that while IET orders are booming, the core Oilfield Services & Equipment (OFSE) segment saw margins soften, which is a near-term risk you can't ignore. We need to break down how they plan to exceed the $4.7 billion full-year Adjusted EBITDA guidance, and why analysts are forecasting $2.59 in full-year earnings per share (EPS).

Revenue Analysis

You need to know where the money is actually coming from, and for Baker Hughes Company (BKR), the story in 2025 is a clear pivot: growth is slowing down overall, but the shift toward Industrial & Energy Technology (IET) is what's keeping the top line moving. The company's Trailing Twelve Months (TTM) revenue, as of the end of Q3 2025, stands at approximately $27.71 billion.

Here's the quick math: that TTM figure represents a year-over-year growth rate of just about 1.51%. Honestly, that's a sharp deceleration from the 9.11% revenue growth BKR posted in the full 2024 fiscal year. It tells you the cyclical Oilfield Services & Equipment (OFSE) segment is facing headwinds, but the diversification strategy is working to stabilize the total revenue picture.

Segment Contribution: The IET Pivot

Baker Hughes Company operates primarily through two segments: Oilfield Services & Equipment (OFSE) and Industrial & Energy Technology (IET). The near-term opportunity is defintely in IET, which is driving the marginal growth while OFSE deals with market softness. For the third quarter of 2025 alone, the consolidated revenue was $7.01 billion.

What this quarterly breakdown shows is a critical shift in where the growth engine sits:

• IET revenue is increasing year-over-year, driven by a strong backlog conversion.
• OFSE revenue is declining, down 8% year-over-year in Q3 2025 to $3.636 billion.
• The increase in IET is what partially offset the OFSE decline to result in the overall modest revenue growth.

To be fair, OFSE still contributes the largest portion of the total revenue, but its growth contribution is shrinking. The IET segment's resilience is the key takeaway for investors right now, and it's why the company is confident in its full-year 2025 revenue guidance of around $27.75 billion.

New Revenue Streams and Growth Catalysts

The significant change in revenue streams isn't just a segment-level shift; it's about new end-markets. IET's strength is directly tied to global energy transition and infrastructure spending, which offers more durable, long-term contracts than the highly volatile oilfield services market.

The primary revenue sources driving IET's performance are clear and concrete:

• Liquefied Natural Gas (LNG) Momentum: Continued demand for LNG equipment and services, which is a major driver of the IET segment's record backlog.
• Gas Infrastructure: Strong orders for gas pipeline and processing infrastructure projects globally.
• New Energy and Technology: This is a growing area, with BKR targeting between $1.4 billion and $1.6 billion in new energy orders for 2025. This includes first-time awards for data center power solutions, like a Q1 2025 award totaling over 350 MW of power capacity.

What this estimate hides is that while IET orders are strong, the revenue from those orders converts over a longer period. Still, the growing IET backlog, which hit a record $32.1 billion in Q3 2025, gives you excellent visibility into future revenue, which is a huge plus. For a deeper dive into the company's full financial picture, you should read our comprehensive analysis: Breaking Down Baker Hughes Company (BKR) Financial Health: Key Insights for Investors.

Profitability Metrics

You're looking at Baker Hughes Company (BKR) because you know the energy services sector is complex, and you need to cut through the noise to see where the real profit is made. The direct takeaway is this: Baker Hughes is successfully executing a long-term strategy of margin expansion, driven by its high-growth Industrial & Energy Technology (IET) segment, which is offsetting volatility in the traditional Oilfield Services & Equipment (OFSE) business.

This isn't just a story of top-line growth. The company has been laser-focused on operational efficiency, and the numbers from 2025 reflect that discipline. For the trailing twelve months (TTM) ending in late 2025, Baker Hughes reported total sales of $27.71 billion. More importantly, the margins tell you how much of that revenue they're keeping at each stage of the income statement.

Gross, Operating, and Net Profit Margins

Looking at the latest figures, the margin profile shows a healthy, expanding business. The gross margin is strong, and the operating margin demonstrates effective cost control below the cost of goods sold (COGS). Here's the quick math on the TTM margins, which give you the clearest picture of current performance:

• Gross Profit Margin: The latest twelve months (LTM) figure is at 21.4%. This means for every dollar of revenue, 21.4 cents is left after paying for the direct costs of services and products.
• Operating Profit Margin: This TTM margin is 12.76%. This is a key indicator of operational muscle, showing what's left after factoring in selling, general, and administrative (SG&A) expenses.
• Net Profit Margin: The TTM net margin sits at 10.43%. This is the final percentage of profit after all expenses, interest, and taxes, and it reflects a significant jump in quality of earnings.

To be fair, the reported net profit margin for the most recent quarter (Q3 2025) was even higher, expanding to 11% from 7.4% a year prior. This expansion is defintely a bullish signal on their strategic shift.

Profitability Trends and Operational Efficiency

The trend in profitability is the most compelling part of the Baker Hughes story right now. Over the past five years, the company has managed to increase its adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin by almost 600 basis points. That is a massive operational achievement, not a fluke. This improvement is largely due to a deliberate portfolio optimization strategy and stringent cost management.

The Industrial & Energy Technology (IET) segment is the engine driving this margin expansion. While the traditional Oilfield Services & Equipment (OFSE) segment faces headwinds from a lower U.S. rig count and cautious producer spending, IET is booming. For example, the IET segment is capitalizing on the massive demand for Liquefied Natural Gas (LNG) and, increasingly, power solutions for data centers. This segment's growth and higher-margin profile are strategically insulating the overall company from the cyclical nature of the oilfield business. In Q2 2025, the consolidated adjusted EBITDA margin improved to 17.5%.

Industry Comparison: Baker Hughes vs. Peers

When you stack Baker Hughes Company up against its primary competitors, its profitability ratios are competitive, and in some cases, leading the pack. This comparison confirms that the company's operational improvements are outpacing many of its peers in the energy services industry.

Here's how the latest Gross Profit Margin stacks up against key competitors:

Baker Hughes' 21.4% gross margin is slightly ahead of major competitors like Slb NV and Halliburton Company. This small but significant edge suggests superior efficiency in producing and delivering their core products and services. The market is rewarding this; analysts expect the company to post an adjusted earnings per share (EPS) of $2.59 for the full fiscal year 2025.

If you want to dive deeper into the institutional confidence behind these numbers, you should check out Exploring Baker Hughes Company (BKR) Investor Profile: Who's Buying and Why?

Next Step: Start modeling a sensitivity analysis on your DCF (Discounted Cash Flow) to see how a 100-basis-point change in the IET segment's gross margin impacts the overall valuation by Friday.

Debt vs. Equity Structure

You want to know if Baker Hughes Company (BKR) is leaning too heavily on borrowed money to fuel its growth, and the short answer is no. The company maintains a very conservative, equity-heavy financing structure, which is a sign of financial strength and stability in the capital-intensive oil and gas sector. Their financial leverage is low, giving them significant flexibility.

Looking at the latest data from the third quarter of 2025, Baker Hughes Company's total debt is approximately $6.056 billion. This is split into a manageable $5,988 million in long-term debt and a minimal $68 million in short-term debt and capital lease obligations. The vast majority of their financing is long-term, which means fewer near-term liquidity concerns. That's a defintely solid balance sheet structure.

The key metric here is the Debt-to-Equity (D/E) ratio, which measures how much debt a company uses to finance its assets relative to the value of shareholders' equity. For Baker Hughes Company, this ratio stands at a low 0.33 (or 33%) as of September 2025. To put that into perspective, the average D/E ratio for the Oil & Gas Equipment & Services industry is around 0.57 as of November 2025. Simply put, Baker Hughes Company is using far less debt relative to its equity than its direct competitors, relying more on its $18.157 billion in total stockholders' equity.

This conservative approach has been recognized by the credit markets. In March 2025, S&P Global Ratings upgraded Baker Hughes Company's issuer credit rating to 'A' from 'A-', and also upgraded its unsecured debt to 'A'. This upgrade reflects their expanding, higher-margin Industrial Energy Technology (IET) business and improving overall margins, which makes their debt even safer. The company also has strong debt coverage, with interest payments covered by EBIT (Earnings Before Interest and Taxes) at a robust 16.4x. They are also expected to repay $599 million of long-term debt that matures in December 2026.

Here's the quick math on their financing balance:

• Total Debt (Q3 2025): $6.056 Billion
• Total Equity (Q3 2025): $18.157 Billion
• Debt-to-Equity Ratio: 0.33

The company is clearly prioritizing equity funding and internal cash generation over aggressive debt financing. This is further evidenced by their stated financial policy: they intend to return 60% to 80% of their free cash flow to shareholders through dividends and share repurchases, with a plan to pay out closer to the upper end of that range in 2025 and 2026. They are generating enough cash to fund operations, invest in growth, and reward shareholders, all while maintaining a low leverage profile. What this estimate hides is the potential impact of a sustained energy price downturn, but even under midcycle commodity price assumptions, their credit ratios are expected to remain strong. For a deeper dive into their overall financial health, you can check out the full post: Breaking Down Baker Hughes Company (BKR) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You're looking for a clear signal on whether Baker Hughes Company (BKR) can comfortably cover its near-term bills and fund its operations, and the answer is a solid, if not spectacular, yes. Their liquidity position is healthy, driven by strong quarterly cash generation, but you should watch working capital efficiency closely as the business pivots.

The company's most recent trailing twelve months (TTM) liquidity ratios are reassuring. The Current Ratio, which measures current assets against current liabilities, stands at 1.41. Honestly, anything above 1.0 is fine, suggesting they have $1.41 in liquid assets for every dollar of short-term debt. That's a good cushion.

The more conservative Quick Ratio (or acid-test ratio), which strips out inventory-the least liquid current asset-is exactly 1.00. This means Baker Hughes Company (BKR) can cover all its immediate obligations without having to sell a single piece of equipment inventory. That's defintely a strong indicator of short-term financial stability.

Working Capital and Cash Flow Trends

Net working capital-current assets minus current liabilities-was a positive $1.107 billion at the end of fiscal year 2024. The trend here is what matters: it has fluctuated, peaking at $1.895 billion in late 2022 before settling. The key is that it remains positive, but it's an area where management needs to demonstrate consistent efficiency as they integrate new, technology-heavy business lines. You want to see that number climb steadily, not just bounce around.

Cash flow is where Baker Hughes Company (BKR) really shines, and it's the best measure of a company's financial strength. In the third quarter of 2025 alone, the company generated $929 million in cash flow from operating activities. That's the cash flowing in from their core business-selling equipment and services-and it tells you the business model is highly cash-generative. Here's the quick math on their Q3 2025 cash movements:

The $699 million in free cash flow (FCF) for the quarter is the cash left over after capital expenditures (CapEx) of $230 million. This FCF is what's available for things like acquisitions, debt reduction, or shareholder returns, and it's a very healthy number. For the full year, the company expects a free cash flow conversion of 45% to 50%.

• Cash and cash equivalents were $2.7 billion as of September 30, 2025.
• They have a $3 billion revolving credit facility, untouched.
• The balance sheet is in a very strong position.

What this estimate hides is the potential cash drain from large, near-term acquisitions, but the current cash balance and untouched credit facility provide ample liquidity to manage this. The strong cash flow from operations is the foundation of their financial strength, giving management flexibility. You can dive deeper into who is betting on this strength by Exploring Baker Hughes Company (BKR) Investor Profile: Who's Buying and Why?

Valuation Analysis

You're looking at Baker Hughes Company (BKR) and wondering if the market is giving you a fair shake on the price. The short answer is that the stock looks reasonably valued, leaning toward a 'Moderate Buy' consensus from Wall Street, but it's not a deep-value play right now.

The company is trading near the higher end of its historical valuation range, which reflects optimism about its Industrial & Energy Technology (IET) segment pivot. You need to look past the surface-level Price-to-Earnings (P/E) ratio and dig into the Enterprise Value-to-EBITDA (EV/EBITDA) to see the full picture of its capital structure.

Here's the quick math on where Baker Hughes Company stands as of November 2025, using key fiscal year data. We see a clear premium compared to historical medians, but the market is defintely pricing in the growth from their technology-focused backlog.

• The forward P/E ratio for 2025 sits at about 19.89.
• The Price-to-Book (P/B) ratio is currently 2.63.
• The Enterprise Value-to-EBITDA (EV/EBITDA) is 10.66.

The P/B ratio is particularly telling, as it's close to its 10-year high of 2.81, which is a warning sign that the stock is being valued at a premium to its book value. This premium is likely tied to the record IET backlog, which you can read more about in their strategic documents: Mission Statement, Vision, & Core Values of Baker Hughes Company (BKR).

Stock Performance and Analyst Sentiment

Over the last 12 months, Baker Hughes Company's stock has had a solid run, reflecting the broader energy sector recovery and their strategic shift. The stock is up approximately 11.07% over the past year as of early November 2025. This momentum has pushed the price to the upper end of its 52-week range, which spans from a low of $33.60 to a high of $50.93. The closing price as of November 17, 2025, was $47.88.

Wall Street's consensus is a 'Moderate Buy,' with 23 out of 27 analysts recommending a Buy rating and 4 suggesting a Hold. The average 12-month price target is $53.38, suggesting a potential upside of about 10.39% from the current price. That's a decent return, but it signals that the easy money from the initial rebound is already in the stock price.

The company's dividend profile remains stable and conservative. They pay an annualized dividend of $0.92 per share, which translates to a yield of about 1.92%. The payout ratio is a healthy 31.4%, meaning they are returning capital to shareholders without straining their earnings or ability to reinvest in the business. This low payout ratio gives them plenty of room to grow the dividend or manage any unexpected dips in the oilfield services market.

What this estimate hides is the potential for volatility if oil prices soften, which would hit the Oilfield Services (OFSE) segment. Your action here is to set a price target near the analyst consensus of $53.38 and use a trailing stop to protect your 12-month gains.

Risk Factors

You're looking at Baker Hughes Company (BKR) and seeing the strong performance in their Industrial & Energy Technology (IET) segment, but you need to know the near-term headwinds. Honestly, the biggest risks for BKR in the 2025 fiscal year fall into three buckets: market volatility in their core business, the very real threat of global trade policy shifts, and the simple challenge of cost inflation.

The company is defintely not immune to the cyclical nature of energy. While the overall 2025 revenue is projected to be robust-with management guiding toward approximately $27.0 billion to $27.8 billion-that top-line number masks some segment-specific pain points. The Oilfield Services and Equipment (OFSE) business is directly tied to drilling activity, and we saw the U.S. rig count fall to its lowest level since November 2021, with only 461 oil rigs reported by May 2025. This softening upstream spending is a clear drag.

Here's the quick math on the impact: softer crude pricing, with WTI crude spot prices averaging in the $63-$68 per barrel range in Q3 2025, compared to higher prices a year prior, directly hurt OFSE. In Q3 2025, the OFSE segment's revenue saw an 8% year-over-year decline, totaling $3.6 billion, and its EBITDA was down 12%. That's a huge chunk of the business feeling the pressure.

Geopolitical and Trade Policy Risks

The second major risk is external and financial: tariffs and trade policy uncertainty. Baker Hughes has explicitly warned that these factors could undermine their full-year core profit outlook. This isn't theoretical; it's a line item on the risk ledger.

Management estimated the potential net impact of tariffs and trade policy shifts to consolidated 2025 adjusted EBITDA could be between $100 million and $200 million. Also, in Q3 2025, the company's attributable net income dropped to $609 million, a 20% decline from the prior year, partly due to increased transaction costs related to acquisitions and disposals. You have to monitor global trade developments because escalating tariffs could derail progress, especially in international markets where BKR has a large footprint.

Another strategic risk is the pace of new Liquefied Natural Gas (LNG) Final Investment Decisions (FIDs). While LNG is a core growth driver, any slowdown in these major, multi-billion-dollar projects could impact the Industrial & Energy Technology (IET) segment's future order intake, even with a record backlog.

• Monitor LNG FID pace-it's key to IET's long-term growth.
• Watch for tariff-related hits to the EBITDA guidance.

Mitigation Strategies and Portfolio Resilience

To be fair, Baker Hughes is not just sitting on its hands. Their strategy is a classic diversification play to build a buffer against oilfield volatility. This is why the IET segment is so important-it's the hedge.

The company has built a record IET backlog of $32.1 billion as of Q3 2025, giving them a strong revenue floor for years to come. They are also actively mitigating supply chain and cost risks:

They are also optimizing their portfolio, like the joint venture with Cactus Inc. in surface pressure control, which allows them to participate in a more focused, potentially more efficient operation. This is a smart move to refine their business mix. You can read more about their long-term focus here: Mission Statement, Vision, & Core Values of Baker Hughes Company (BKR).

The key takeaway is that while the OFSE segment faces near-term margin pressure from market conditions, the strength and massive, contracted backlog of the IET segment are the primary anchors for the company's financial health in 2025 and beyond.

Growth Opportunities

You're looking at Baker Hughes Company (BKR) and trying to figure out where the real money will be made over the next few years, and honestly, the story is a pivot. The company is defintely shifting away from its traditional, cyclical Oilfield Services & Equipment (OFSE) segment and leaning hard into its higher-margin Industrial & Energy Technology (IET) business, which is the clear growth engine.

The near-term growth is anchored in a massive backlog and strategic acquisitions. For the full fiscal year 2025, the company raised its guidance, now expecting revenue between $27.0 billion and $27.8 billion, with adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) projected at $4.74 billion. That's solid, but the real excitement is in the IET segment's visibility, which boasts a record backlog of $32.1 billion as of the third quarter of 2025. That's a clear line of sight for future revenue.

Here's the quick math: The IET segment is targeting at least $40 billion in new orders over the next three years, driven by three key markets:

• Liquefied Natural Gas (LNG) infrastructure.
• Data center power solutions.
• Decarbonization technologies (hydrogen and CCUS).

The company is strategically using portfolio optimization-selling off non-core assets to fund these high-growth areas. For example, they sold the Precision Sensors & Instrumentation (PSI) product line for $1.15 billion in Q2 2025, while simultaneously acquiring Continental Disc Corporation (CDC) for $540 million to bolster their pressure management solutions. It's a classic move: divest low-margin, acquire high-tech, and focus capital.

The competitive advantage for Baker Hughes Company (BKR) is its dual-pronged approach, balancing traditional energy expertise with a forward-looking technology portfolio. While the US oil and gas rig count remains a headwind for OFSE, the IET segment is thriving by selling technology into the global energy transition (the shift to cleaner energy sources) and the booming digital economy.

The most concrete example is the data center market. In Q2 2025 alone, IET secured $650 million in data center-related orders, including a major contract to supply 30 NovaLT™ turbines, which will deliver up to 500 megawatts (MW) of power across U.S. data centers. This is a massive, high-growth market where their multi-fuel turbine technology gives them a strong foothold.

Looking ahead, the company's 'Horizon 2' strategy aims for a 20% total company adjusted EBITDA margin by fiscal year 2028, showing a commitment to profitability over sheer volume. Analyst consensus supports this trajectory, forecasting an Earnings Per Share (EPS) growth of 7.17% CAGR (Compound Annual Growth Rate) over the next five years, even with modest revenue growth projections. This focus on margin expansion is what separates them from peers.

The pending $13.6 billion acquisition of Chart Industries, a leader in gas and liquid molecule handling, is a massive bet on the future of LNG and clean energy infrastructure. This deal, which received shareholder approval in Q3 2025, is expected to generate $325 million in annualized cost synergies by 2028. This move will significantly deepen their exposure to the clean energy market and is a clear indicator of where the company sees its long-term future. You can read more about the investment landscape in Exploring Baker Hughes Company (BKR) Investor Profile: Who's Buying and Why?

To summarize the financial outlook and key drivers for 2025:

What this estimate hides is the risk from slower-than-expected oilfield activity, which still impacts the OFSE segment. Still, the company's focus on digital solutions, like the digital integration partnership with Computer Modelling Group (CMG) in June 2025, is a smart way to drive productivity and efficiency gains across the entire energy value chain, making their traditional business more resilient.