Baker Hughes (BKR) Stock Sinks on Disappointing Earnings Results

  • Baker Hughes (BKR) released its second-quarter 2022 earnings results this morning.
  • The company anticipates "deteriorating" demand for Baker Hughes' petroleum products.
  • Consequently, BKR stock is down 10% as of this writing.
BKR stock - Baker Hughes (BKR) Stock Sinks on Disappointing Earnings Results

Source: Shutterstock

Baker Hughes (NASDAQ:BKR), an oilfield services firm, just issued the company’s second-quarter results for 2022. Those results clearly didn’t impress Wall Street, as BKR stock is falling hard. Moreover, investors are undoubtedly pondering Baker Hughes’ acknowledgment of a “deteriorating” demand outlook for the company’s products.

Inflation and rising interest rates are putting pressure on a wide range of U.S. businesses. Among them is Baker Hughes, which expressed a cautious outlook for the near future. This, along with Baker Hughes’ Q2 2022 results, evidently put some traders in a sour mood this morning.

Here’s the breakdown of the data. Baker Hughes’ quarterly adjusted earnings of 11 cents per share missed Wall Street’s expectation of 21 cents per share. That’s a wide miss, and the top-line result also wasn’t ideal. Specifically, Baker Hughes reported $5.05 billion in quarterly revenue, missing the analyst consensus estimate of $5.34 billion.

Baker Hughes’ balance sheet also may have disappointed some investors. As of June 30, 2022, the company’s non-GAAP free cash flow totaled $147 million. That’s down 62% year-over-year (YOY). It also missed the analyst consensus forecast of $235 million.

What’s Happening With BKR Stock?

It didn’t take long for BKR stock traders to react to this less-than-stellar data. Indeed, they sent the stock 10% lower this morning and threatened to push it below the key $25 level.

It’s possible that they weren’t only reacting to Baker Hughes’ second-quarter results. They might have also been responding to some things that Baker Hughes Chairman and CEO Lorenzo Simonelli said in the company’s press release.

For example, Simonelli admitted that “the demand outlook” for Baker Hughes’ petroleum products “for the next 12 to 18 months is deteriorating.” Naturally, this admission isn’t getting financial traders in an optimistic mood.

Furthermore, the CEO observed that inflation is eroding consumer purchasing power and that central banks are “aggressively” raising interest rates “to combat inflation.” The implication, apparently, is that these factors could provide headwinds to petroleum production and related services companies like Baker Hughes.

Simonelli tried to quell investors’ concerns, saying that Baker Hughes “will continue to execute on our long-term strategy.” Today, however, it’s clear that BKR stock isn’t catching a bid and Wall Street isn’t yet convinced that a turnaround to the upside is imminent.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


Article printed from InvestorPlace Media, https://investorplace.com/2022/07/baker-hughes-bkr-stock-sinks-on-disappointing-earnings-results/.

©2022 InvestorPlace Media, LLC