BKR — Baker Hughes Company

Two opposing forces as of 2026-09-13. Fundamentals/news flow is clearly bullish: Q2 2026 adjusted EPS of $0.64 beat the $0.48 consensus, orders jumped 49% YoY to $10.5B with a record $7.1B in IET bookings, RPO hit an all-time $40.1B, and management raised FY2026 guidance to $28.5-$30.3B revenue and $4.875-$5.475B adjusted EBITDA after closing Chart Industries in mid-July 2026. Wall Street agrees - 30 buys, 14 holds, 1 sell, consensus target $74.27. The tape disagrees: the stock fell 6.99% in the week and 8.12% in the month into 2026-09-13, RSI is 35.85, and consensus next-FY EPS of $2.629 sits BELOW trailing EPS of $3.125 - the market is discounting dilution and roughly $9.6B of new long-term debt (from $5.84B at 12/31/25 to $15.48B at 6/30/26) rather than celebrating the backlog. Hence Neutral, not Bullish.

Reported financials have been flat for three years - this is a stable business with an inflecting order book, not yet an inflecting P&L. Revenue: $6.64B (Q3 2023) ... $7.39B (Q4 2025) ... $6.74B (Q2 2026), stuck in a $6.4-7.4B quarterly band, and Q2 2026's $6.742B was actually slightly below Q2 2025's $6.910B. Operating income tells the same story: $854M in Q2 2026 vs $887M a year earlier, a 12.7% operating margin vs 12.8% - no expansion, and no compression either. Gross margin TTM is 23.6%, operating 12.9%, net 11.2%. Reported EPS is lumpy rather than trending ($0.43/$0.51 in 2023; $0.45/$0.58/$0.77/$1.18 in 2024; $0.40/$0.71/$0.61/$0.88 in 2025; $0.93/$0.69 in H1 2026), driven by mix and one-offs. Cash flow is the strongest line: Q2 2026 operating cash flow was $1.345B and FCF $1.045B, versus $510M/$209M a year earlier, and TTM FCF is ~$3.13B (5.3% FCF yield). The genuine inflection is in orders and backlog, not revenue: the Chart deal closed mid-July 2026, so it contributed only ~2 weeks to Q2. The raised FY26 guide implies H2 2026 revenue of roughly $15.2-$17.0B versus $13.33B in H1 - a step change that is mostly acquired, and which has to be proven on the 2026-10-22 print.

Not cheap versus its own history, but not egregious on cash flow. As of 2026-09-13, BKR's trailing P/E of 18.81 sits above its 5-year average of 16.25, and price/sales of 2.115 is a 55% premium to the 5-year average of 1.36 - the market has already re-rated this from 'oil service' to 'LNG/data-center infrastructure'. P/B is 2.94, PEG 9.66 (meaningless given flat trailing growth). The more forgiving lens: EV is ~$58.4B ($58.63B market cap + $15.48B long-term debt - $15.73B cash), which is ~11.3x the FY26 adjusted EBITDA guidance midpoint of $5.175B and ~12.5x on the screener's EV/EBITDA - mid-range for a company with a $40.1B backlog. The wrinkle is that consensus next-FY EPS of $2.629 implies a forward P/E of 22.5x, richer than trailing - that estimate appears stale relative to the Chart accretion and interest cost, and its resolution over the next two quarters is the whole valuation debate. Verdict: fairly-to-fully valued, with the premium justified only if H2 2026 revenue conversion and 2027 EPS revisions deliver.

The stock is pricing backlog conversion, not current earnings. A trailing P/E of 18.8x on $3.125 of EPS already assumes normalization, while the ~22.5x forward P/E on $2.629 of consensus next-FY EPS embeds the messy math of a $13.6B debt-funded acquisition: incremental interest expense and share-count effects landing before the acquired EBITDA fully annualizes. So the setup is asymmetric around the 2026-10-22 Q3 print. If Chart shows up as guided ($1.85-$2.25B of revenue and $300-$400M of EBITDA for the stub period) with OFSE revenue stable, the $2.629 number gets revised upward and today's 22x forward multiple compresses without the price moving. If H2 revenue instead lands near the low end of the $28.5-$30.3B range without accompanying EPS, you're left holding a 19x trailing P/E stock with three years of flat organic revenue - that is the downside. Watch two tells: RPO-to-revenue conversion and IET segment margin.

As of 2026-09-13, BKR was oversold-adjacent but not oversold: RSI(14) 35.85, price $59.06 sitting 6.19% below the 20-day SMA and 2.28% below the 50-day SMA, but still 0.51% above the 200-day SMA. The 52-week range is $43.92-$70.41, and the 6-month return (+8.85%) versus 3-month (-6.46%) and 1-month (-8.12%) shows a fading uptrend, not a broken one - yet. The 200-day is the line in the sand: a decisive break below ~$58.7 would confirm the intermediate trend has rolled over; holding it keeps this in a normal pullback. Entry-timing implication: this is not a chase. Wait for RSI to stabilize above ~40 with a reclaim of the 50-day (~$60.4), or for a test of the $53-55 zone (roughly the 52-week midpoint) if the market keeps selling the Chart leverage story. Buying strength above $60.4 and buying the $54 retest are both more defensible than buying the current drift.

• Global LNG FID cycle and long-cycle gas infrastructure spending - the core driver of BKR's Industrial & Energy Technology backlog and the reason consensus targets sit above the current price.
• AI/data-center power and cooling demand: cryogenic and gas-processing equipment (Chart's specialty) is now a direct data-center thermal-management play, a genuinely new secular demand vector.
• Oil and gas prices plus international/offshore upstream capex - OFSE revenue is levered to rig counts and operator budgets, and a softer commodity tape would temper the order momentum.
• Rates and leverage cost: long-term debt tripled to $15.48B in two quarters to fund Chart, so interest expense and the deleveraging path now directly affect EPS and multiple perception.
• Energy-transition policy, tariffs, and supply-chain/geopolitical friction (Middle East, shipping) affecting the timing of multi-billion-dollar project awards and revenue recognition.

• Q3 2026 earnings on 2026-10-22: the first full consolidated look at Chart Industries, plus reaffirmation of the raised FY26 guide ($28.5-$30.3B revenue, $4.875-$5.475B adjusted EBITDA) and any synergy quantification.
• Fall 2026 investor conferences (Morgan Stanley, TD Cowen, PEP) through late September 2026 - management's multi-year margin expansion and synergy framework could drive estimate revisions.
• Sell-side model updates for FY2027 as Chart annualizes: the $2.629 consensus next-FY EPS looks stale and an upward revision cycle is a plausible re-rating trigger.
• Continued IET booking momentum and RPO conversion - further record data-center/LNG awards would validate the premium multiple.
• Balance-sheet optionality: $15.73B of cash against $15.48B of long-term debt (essentially net-zero net debt) leaves room for deleveraging, buybacks, or further portfolio moves.

• Acquisition execution and leverage: long-term debt rose from $5.84B (12/31/25) to $15.48B (6/30/26) to fund Chart; integration missteps, higher-than-expected interest expense, or synergy slippage would hit EPS that already sits below trailing levels.
• Organic revenue stagnation - three years of flat $6.4-7.4B quarterly revenue means the growth thesis depends entirely on backlog conversion that has historically been slow and lumpy.
• Multiple compression risk: P/S at 2.115 vs a 1.36 five-year average means the stock has no valuation cushion if growth disappoints; the 8% one-month drawdown may be the early stages of exactly that.
• Commodity/cyclical exposure in OFSE if oil prices or international upstream spend soften, hitting both orders and margins.
• Project execution and geopolitical risk on large LNG and data-center infrastructure awards, including supply-chain delays that push revenue recognition to the right.

Baker Hughes is a decent, cash-generative business whose reported numbers lag its narrative, and as of 2026-09-13 the market is charging a premium for the narrative rather than the numbers. You are paying 18.8x trailing and roughly 22.5x stale consensus-forward earnings - above the 16.25x five-year average - for a record $40.1B RPO, record $7.1B of quarterly IET bookings, and newly enlarged LNG/data-center cryogenics exposure via Chart, all of which is real but not yet in the P&L. The positive: the 8% one-month slide has taken RSI to 35.85 and the price back to its 200-day, so the entry math is meaningfully better than a month ago, and free cash flow of ~$3.13B TTM covers the 1.5% dividend several times over. The negative: organic revenue has been flat for three years and forward EPS estimates are falling, so this is a 'prove it on October 22' story, not an obvious bargain. I'd be constructive on stabilization above the 200-day rather than buying the current downtrend.

EV/EBITDA on forward EBITDA: I estimate FY2027E adjusted EBITDA of ~$6.1B (FY26 guidance midpoint of $5.175B plus a full year of Chart at roughly $0.7-0.8B of EBITDA versus the ~$350M stub in 2026, plus modest organic growth), apply 11.5x - a slight premium to the legacy oilfield-services multiple but below the current 12.5x screener figure, justified by the LNG/data-center mix - giving an EV of ~$70.2B. Deducting ~$0.8B of net debt (against $15.73B cash and $15.48B long-term debt, plus small current maturities) and dividing by ~993M shares yields approximately $69 per share, which also sits between trailing-20x and the lower end of the analyst range and implies ~17% upside from the 2026-09-13 price of $59.06.