Financial Analysis: Baker Hughes (NASDAQ:BKR) versus Nabors Industries (NYSE:NBR)

Baker Hughes (NASDAQ:BKR) and Nabors Industries (NYSE:NBR) are both energy companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, dividends, analyst recommendations, profitability, valuation and risk.

Risk and Volatility

Baker Hughes has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500. Comparatively, Nabors Industries has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Baker Hughes and Nabors Industries, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Baker Hughes	0	3	16	2	2.95
Nabors Industries	0	6	2	0	2.25

Baker Hughes presently has a consensus price target of $72.24, suggesting a potential upside of 32.79%. Nabors Industries has a consensus price target of $103.43, suggesting a potential upside of 34.79%. Given Nabors Industries’ higher possible upside, analysts clearly believe Nabors Industries is more favorable than Baker Hughes.

Profitability

This table compares Baker Hughes and Nabors Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Baker Hughes	11.17%	13.85%	5.80%
Nabors Industries	7.64%	-7.06%	-1.45%

Institutional & Insider Ownership

92.1% of Baker Hughes shares are owned by institutional investors. Comparatively, 81.9% of Nabors Industries shares are owned by institutional investors. 0.2% of Baker Hughes shares are owned by insiders. Comparatively, 5.3% of Nabors Industries shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Baker Hughes and Nabors Industries”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Baker Hughes	$27.73 billion	1.95	$2.59 billion	$3.10	17.55
Nabors Industries	$3.21 billion	0.38	$286.62 million	$13.44	5.71

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

Summary

Baker Hughes beats Nabors Industries on 11 of the 15 factors compared between the two stocks.

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.

About Nabors Industries

Nabors Industries Ltd. provides drilling and drilling-related services for land-based and offshore oil and natural gas wells in the United States and internationally. The company operates through four segments: U.S. Drilling, International Drilling, Drilling Solutions, and Rig Technologies. It provides tubular running services, including casing and tubing running, and torque monitoring; managed pressure drilling services; and drilling-bit steering systems and rig instrumentation software. The company also offers drilling systems comprising ROCKit, a directional steering control system; SmartNAV, a collaborative guidance and advisory platform; SmartSLIDE, a directional steering control system; and RigCLOUD, a digital infrastructure to integrate applications to deliver real-time insight into operations across the rig fleet. In addition, it operates a fleet of land-based drilling rigs and marketed platforms rigs; manufactures and sells top drives, catwalks, wrenches, drawworks, and other drilling related equipment, such as robotic systems and downhole tools; and provides aftermarket sales and services for the installed base of its equipment. Nabors Industries Ltd. was founded in 1952 and is based in Hamilton, Bermuda.