Baker Hughes

Methodology

Baker Hughes' oilfield services and equipment business is highly cyclical with earnings tied to oil and gas capital spending by exploration and production companies. The company's diversification into LNG equipment and digital solutions provides some stability beyond pure drilling services. This calculation works poorly with volatile energy earnings—using normalized assumptions about mid-cycle oil prices and rig activity provides more reliable baselines than current results.

Methodology

Baker Hughes' PEG ratio swings dramatically with energy cycles, often appearing cheapest at cycle peaks when growth is highest but unsustainable. The company's equipment backlog and service contracts provide some visibility, but oilfield services ultimately depend on sustained commodity prices. For Baker Hughes, valuation based on normalized rig counts, service pricing, and backlog quality provides better insight than earnings-based PEG during volatile periods.

Methodology

Baker Hughes maintains a modest dividend yield (around 2.0-3.0%) through energy cycles, providing some return during downturns when growth stalls or reverses. The company's commitment to the dividend despite cyclicality appeals to energy investors seeking income. PEGY is somewhat relevant for Baker Hughes, though for an energy services company, free cash flow generation at various oil price scenarios and debt levels matter more than dividend-adjusted earnings multiples.