Baker Hughes (BHI) Posts Narrower-than-Expected Loss In Q3

Baker Hughes Inc. (NYSE:BHI) reported third-quarter 2016 adjusted loss from continuing operations of 15 cents per share, substantially narrower than the Zacks Consensus Estimate of a loss of 43 cents per share. Nonetheless, the quarterly figure was significantly wider than the year-ago adjusted loss of 5 cents per share.

Revenues of $2,353 million came in below the Zacks Consensus Estimate of $2,430 million. The top line, however, plunged from the year-ago level of $3,786 million. Of Baker Hughes' total quarterly revenue, North America, Europe/Africa/Russia/Caspian, Middle East/Asia-Pacific and Latin America accounted for 28.6%, 22%, 27.6% and 10.3%, respectively. The remainder was generated by the Industrial Services segment.

The year-over-year deterioration was mainly due to steep activity reductions and project delays in Gulf of Mexico, West Africa, and Norwegian deepwater.

Liquidity

At the end of the third quarter, Baker Hughes had $3,736 million in cash and cash equivalents, while long-term debt was $2,895 million. In the reported quarter, capital expenditures totaled $70 million, which reflects a decrease of $108 million or 61% from the third quarter of 2015. The reduction in capital expenditure is attributable to lower activity levels and focus on capital discipline. The expense level remained unchanged sequentially.

Depreciation and amortization expenses were $262 million, down 14% sequentially and 39% year over year. The decline in expenses is primarily attributable to asset impairments and lower capital spending.

BAKER-HUGHES Price, Consensus and EPS Surprise

BAKER-HUGHES Price, Consensus and EPS Surprise | BAKER-HUGHES Quote

Zacks Rank & Stocks to Consider

Currently, Baker Hughes carries a Zacks Rank #2 (Buy). Other well-ranked players in the energy sector are Enviva Partners, LP (NYSE:EVA) , Helix Energy Solution Group (NYSE:HLX) and EQT Midstream Partners (NYSE:EQM) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enviva Partners has a mixed earnings surprise history. The partnership posted positive earnings surprise in two of the last four quarters. It reported a positive earnings surprise of 20.51% in the preceding quarter.

Helix Energy posted a positive earnings surprise of 150.00% in the preceding quarter. It reported a positive earnings surprise in all of the four preceding quarters.

In the last reported quarter, EQT Midstream Partners delivered a positive earnings surprise of 6.72%. Coming to the earnings surprise history, the company beat estimates in three of the last four quarters.

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