Analyzing Baker Hughes (NYSE:BKR) & NOW (NYSE:DNOW)

Baker Hughes (NYSE:BKR) and NOW (NYSE:DNOW) are both oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Profitability

This table compares Baker Hughes and NOW’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Baker Hughes 0.89% 1.19% 0.78%
NOW 1.89% 3.45% 2.35%

Valuation and Earnings

This table compares Baker Hughes and NOW’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Baker Hughes $22.88 billion 1.00 $195.00 million $0.66 33.65
NOW $3.13 billion 0.40 $52.00 million $0.36 31.72

Baker Hughes has higher revenue and earnings than NOW. NOW is trading at a lower price-to-earnings ratio than Baker Hughes, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Baker Hughes has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500. Comparatively, NOW has a beta of 1.43, meaning that its share price is 43% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Baker Hughes and NOW, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Baker Hughes 0 0 3 0 3.00
NOW 0 2 1 0 2.33

Baker Hughes currently has a consensus target price of $30.00, suggesting a potential upside of 35.07%. NOW has a consensus target price of $13.33, suggesting a potential upside of 16.75%. Given Baker Hughes’ stronger consensus rating and higher possible upside, research analysts clearly believe Baker Hughes is more favorable than NOW.

Institutional and Insider Ownership

97.5% of Baker Hughes shares are owned by institutional investors. 0.2% of Baker Hughes shares are owned by insiders. Comparatively, 2.6% of NOW shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Baker Hughes beats NOW on 9 of the 14 factors compared between the two stocks.

Baker Hughes Company Profile

Baker Hughes Company provides integrated oilfield products, services, and digital solutions worldwide. Its Oilfield Services segment offers drilling, wireline, evaluation, completion, production, and intervention services; and drilling and completions fluids, completions tools and systems, wellbore intervention tools and services, artificial lift systems, pressure pumping systems, and oilfield and industrial chemicals for integrated oil and natural gas and oilfield service companies. The company's Oilfield Equipment segment designs and manufactures products and services, including pressure control equipment and services, subsea production systems and services, drilling equipment, and flexible pipeline systems; and onshore and offshore drilling and production systems, and equipment for floating production platforms, as well as provides a range of services related to onshore and offshore drilling activities. Its Turbomachinery & Process Solutions segment provides equipment and related services for mechanical-drive, compression, and power-generation applications across the oil and gas industry. Its product portfolio includes drivers, compressors, and turnkey solutions; and pumps, valves, and compressed natural gas and small-scale liquefied natural gas solutions. This segment serves upstream, midstream, onshore and offshore, industrial, engineering, procurement, and construction companies. The company's Digital Solutions segment provides sensor-based measurement, non-destructive testing and inspection, turbine, generator and plant controls, and condition monitoring, as well as pipeline integrity solutions for a range of industries, including oil and gas, power generation, aerospace, metals, and transportation. It serves through direct and indirect channels. The company was formerly known as Baker Hughes, a GE company and changed its name to Baker Hughes Company in October 2019. Baker Hughes Company is based in Houston, Texas.

NOW Company Profile

NOW Inc. distributes energy and industrial products in the United States, Canada, and internationally. It offers consumable maintenance, repair, and operating supplies; and pipes, valves, fittings, flanges, gaskets, fasteners, electrical products, instrumentations, artificial lift, pumping solutions, valve actuation and modular process, and measurement and control equipment; and mill supplies, tools, safety supplies, and personal protective equipment, as well as applied products and applications, such as artificial lift systems, coatings, and other expendable items. The company also provides machine, cutting, power, and hand tools; OEM equipment including pumps, generator sets, air and gas compressors, dryers, blowers and valves; and warehouse and inventory management solutions; and application systems, work processes, parts integration, optimization solutions, and after-sales support. In addition, it offers supply chain and materials management solutions that include procurement, inventory and warehouse management, logistics, point of issue technology, project management, business process, and performance metrics reporting. The company offers its products under the DistributionNOW and Wilson Export brand names. It serves customers in the upstream, midstream, and downstream sectors of the energy industry, including drilling contractors, well servicing companies, independent and national oil and gas companies, midstream operators, and refineries, as well as petrochemical, chemical, utilities, and other downstream energy processors; and industrial and manufacturing companies. NOW Inc. was incorporated in 2013 and is headquartered in Houston, Texas.

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