National-Oilwell Varco (NYSE:NOV) vs. Baker Hughes (NYSE:BKR) Critical Analysis

National-Oilwell Varco (NYSE:NOV) and Baker Hughes (NYSE:BKR) are both oils/energy companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitability, institutional ownership, dividends and analyst recommendations.

Analyst Ratings

This is a summary of recent ratings and recommmendations for National-Oilwell Varco and Baker Hughes, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National-Oilwell Varco 3 9 11 0 2.35
Baker Hughes 0 0 3 0 3.00

National-Oilwell Varco currently has a consensus target price of $27.58, suggesting a potential upside of 23.18%. Baker Hughes has a consensus target price of $30.00, suggesting a potential upside of 32.68%. Given Baker Hughes’ stronger consensus rating and higher probable upside, analysts clearly believe Baker Hughes is more favorable than National-Oilwell Varco.

Profitability

This table compares National-Oilwell Varco and Baker Hughes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National-Oilwell Varco -66.29% -2.82% -1.84%
Baker Hughes 0.89% 1.19% 0.78%

Earnings and Valuation

This table compares National-Oilwell Varco and Baker Hughes’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National-Oilwell Varco $8.45 billion 1.02 -$31.00 million ($0.08) -279.88
Baker Hughes $22.88 billion 1.02 $195.00 million $0.66 34.26

Baker Hughes has higher revenue and earnings than National-Oilwell Varco. National-Oilwell Varco 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 & Volatility

National-Oilwell Varco has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, Baker Hughes has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500.

Dividends

National-Oilwell Varco pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Baker Hughes pays an annual dividend of $0.72 per share and has a dividend yield of 3.2%. National-Oilwell Varco pays out -250.0% of its earnings in the form of a dividend. Baker Hughes pays out 109.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

95.4% of National-Oilwell Varco shares are owned by institutional investors. Comparatively, 97.5% of Baker Hughes shares are owned by institutional investors. 0.9% of National-Oilwell Varco shares are owned by company insiders. Comparatively, 0.2% of Baker Hughes shares are owned by company 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 National-Oilwell Varco on 11 of the 16 factors compared between the two stocks.

About National-Oilwell Varco

National Oilwell Varco, Inc. designs, manufactures, and sells systems, components, and products for oil and gas drilling and production worldwide. It operates in three segments: Wellbore Technologies, Completion & Production Solutions, and Rig Technologies. The Wellbore Technologies segment offers various equipment and technologies used to perform drilling operations. It also provides solids control and waste management equipment and services; drilling fluids; portable power generation products; drill and wired pipes; drilling optimization and automation services; tubular inspection, repair, and coating services; rope access inspection, instrumentation, and measuring and monitoring services; downhole and fishing tools; steerable technologies; hole openers; and drill bits. The Completion & Production Solutions segment provides equipment and technologies for hydraulic fracture stimulation, including pressure pumping trucks, blenders, sanders, hydration units, injection units, flowline, and manifolds; well intervention, such as coiled tubing units, coiled tubing, and wireline units, as well as blowout preventers and tools; onshore production comprising fluid processing systems, composite pipes, surface transfer and progressive cavity pumps, and artificial lift systems; offshore production that include fluid processing systems, floating production systems, and subsea production technologies; and connectors for conductor pipes. The Rig Technologies segment offers substructures, derricks, and masts; cranes; jacking systems; pipe lifting, racking, rotating, and assembly systems; mud pumps; blowout preventers; drives and generators; rig instrumentation and control systems; mooring, anchor, and deck handling machinery; and pipelay and construction systems. It also provides spare parts, repair, and rentals, as well as remote equipment monitoring, technical support, field service, and customer training services. The company was founded in 1862 and is based in Houston, Texas.

About Baker Hughes

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.

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