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HOUSTON - Baker Hughes (NASDAQ: BKR), the $36.7 billion energy technology company with annual revenues of $27.8 billion, has entered into an agreement to create a joint venture with a subsidiary of Cactus, Inc. (NYSE: WHD), where Baker Hughes will contribute its surface pressure control (SPC) product line. According to InvestingPro data, Baker Hughes maintains a perfect Piotroski Score of 9, indicating strong financial health. The deal, announced Monday, will see Cactus assume operational control and a 65% ownership stake, with Baker Hughes retaining the remaining 35%.
The newly formed entity will operate independently of Cactus’s existing Pressure Control business and aims to maintain its leading position in the international market for surface wellhead and production tree systems. This move is part of Baker Hughes’s strategy to optimize its portfolio, focusing on core growth areas and reallocating capital towards more lucrative opportunities. Trading at a P/E ratio of 12.4 and currently undervalued according to InvestingPro analysis, Baker Hughes has demonstrated strong financial discipline with moderate debt levels.
Baker Hughes Chairman and CEO Lorenzo Simonelli emphasized the transaction’s alignment with the company’s strategy to enhance earnings durability and cash flow while providing long-term value to shareholders. "This transaction marks an important step in our ongoing portfolio optimization strategy, enabling us to sharpen our focus on core growth areas while continuing to drive higher returns," Simonelli said.
He also reassured partners and customers of the SPC product line, stating that the joint venture will enhance innovation and reliability in well control by integrating Cactus’s unconventional expertise and agility into international markets.
The completion of the transaction is contingent on customary conditions, including regulatory approvals, and is expected to close in the second half of 2025.
About Baker Hughes: Baker Hughes is an energy technology company that offers solutions to energy and industrial customers globally. With operations in over 120 countries, the company is focused on making energy safer, cleaner, and more efficient. The company has maintained dividend payments for 39 consecutive years, with a current dividend yield of 2.48%. Discover more detailed insights and access comprehensive research reports for Baker Hughes and 1,400+ other stocks with InvestingPro.
The information for this article is based on a press release statement.
In other recent news, Baker Hughes announced its first-quarter 2025 earnings, reporting an adjusted earnings per share (EPS) of $0.51, which exceeded the forecast of $0.48. However, the company’s revenue was $6.43 billion, falling short of the anticipated $6.53 billion. Despite the earnings beat, the revenue miss contributed to a 3.79% decline in Baker Hughes’ stock in after-hours trading. The company also reported an adjusted EBITDA of $1.04 billion, marking a 10% increase year-over-year. RBC Capital Markets recently lowered its price target for Baker Hughes from $50.00 to $46.00, while maintaining an Outperform rating, following the company’s first-quarter results. The revision was influenced by uncertainties in tariffs and commodity prices, although Baker Hughes’ EBITDA exceeded expectations by 2%. RBC Capital Markets noted that despite the challenges, the stock might offer a good opportunity for patient investors. Baker Hughes continues to face a complex macroeconomic environment, with ongoing tariff impacts and fluctuating commodity prices being key challenges.
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