Core Laboratories (NYSE:CLB) & Baker Hughes (NASDAQ:BKR) Critical Review

Core Laboratories (NYSE:CLB) and Baker Hughes (NASDAQ:BKR) are both energy companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, profitability, analyst recommendations, earnings, dividends and risk.

Profitability

This table compares Core Laboratories and Baker Hughes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Core Laboratories	6.21%	12.85%	5.74%
Baker Hughes	10.43%	14.22%	6.49%

Volatility & Risk

Core Laboratories has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500. Comparatively, Baker Hughes has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Institutional and Insider Ownership

97.8% of Core Laboratories shares are owned by institutional investors. Comparatively, 92.1% of Baker Hughes shares are owned by institutional investors. 0.9% of Core Laboratories shares are owned by insiders. Comparatively, 0.3% of Baker Hughes shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Core Laboratories and Baker Hughes”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Core Laboratories	$517.50 million	1.75	$31.40 million	$0.67	29.03
Baker Hughes	$27.83 billion	1.84	$2.98 billion	$2.90	17.86

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

Analyst Recommendations

This is a summary of current ratings and price targets for Core Laboratories and Baker Hughes, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Core Laboratories	0	4	0	0	2.00
Baker Hughes	0	3	23	0	2.88

Core Laboratories presently has a consensus target price of $12.50, indicating a potential downside of 35.74%. Baker Hughes has a consensus target price of $54.04, indicating a potential upside of 4.36%. Given Baker Hughes’ stronger consensus rating and higher probable upside, analysts plainly believe Baker Hughes is more favorable than Core Laboratories.

Dividends

Core Laboratories pays an annual dividend of $0.04 per share and has a dividend yield of 0.2%. Baker Hughes pays an annual dividend of $0.92 per share and has a dividend yield of 1.8%. Core Laboratories pays out 6.0% of its earnings in the form of a dividend. Baker Hughes pays out 31.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Baker Hughes has raised its dividend for 4 consecutive years. Baker Hughes is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Baker Hughes beats Core Laboratories on 12 of the 17 factors compared between the two stocks.

About Core Laboratories

Core Laboratories Inc. provides reservoir description and production enhancement services and products to the oil and gas industry in the United States, and internationally. It operates through Reservoir Description and Production Enhancement segments. The Reservoir Description segment includes the characterization of petroleum reservoir rock and reservoir fluid samples to enhance production and improve recovery of crude oil and gas from its clients' reservoirs. It offers laboratory-based analytical and field services to characterize properties of crude oil and oil delivered products; and proprietary and joint industry studies, as well as services that support carbon capture, utilization and storage, geothermal projects, and the evaluation and appraisal of mining activities. The Production Enhancement segment provides services and products relating to reservoir well completions, perforations, stimulations, production, and well abandonment. It offers integrated diagnostic services to evaluate and monitor the effectiveness of well completions and to develop solutions to improve the effectiveness of enhanced oil recovery projects. The company markets and sells its products through a combination of sales representatives, technical seminars, trade shows, and print advertising, as well as through distributors. Core Laboratories Inc. was founded in 1936 and is based in Houston, Texas.

About Baker Hughes

Baker Hughes Company provides a portfolio of technologies and services to energy and industrial value chain worldwide. The company operates through Oilfield Services & Equipment (OFSE) and Industrial & Energy Technology (IET) segments. The OFSE segment designs and manufactures products and provides related services, including exploration, appraisal, development, production, rejuvenation, and decommissioning for onshore and offshore oilfield operations. This segment also provides drilling services, drill bits, and drilling and completions fluids; completions, intervention, measurements, pressure pumping, and wireline services; artificial lift systems, and oilfield and industrial chemicals; subsea projects and services, flexible pipe systems, and surface pressure control systems; and integrated well services and solutions. It serves oil and natural gas companies; the United States and international independent oil and natural gas companies; national or state-owned oil companies; engineering, procurement, and construction contractors; geothermal companies; and other oilfield service companies. The IET segment provides gas technology equipment, including drivers, driven equipment, flow control, and turnkey solutions for the mechanical-drive, compression, and power-generation applications; and energy sectors, such as oil and gas, LNG operations, petrochemical, and carbon solutions. This segment also provides rack-based vibration monitoring equipment and sensors; integrated asset performance management products; inspection services; pumps, valves, and gears; precision sensors and instrumentation, and condition monitoring solutions. It serves upstream, midstream, downstream, onshore, offshore, and small and large scale customers. 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 was incorporated in 2016 and is based in Houston, Texas.