Baker Hughes (NASDAQ:BKR) versus Liberty Energy (NYSE:LBRT) Critical Contrast

Liberty Energy (NYSE:LBRT) and Baker Hughes (NASDAQ:BKR) are both energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, valuation, earnings, risk and analyst recommendations.

Risk and Volatility

Liberty Energy has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500. Comparatively, Baker Hughes has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Profitability

This table compares Liberty Energy and Baker Hughes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Liberty Energy	5.29%	6.01%	3.58%
Baker Hughes	11.04%	14.56%	6.53%

Earnings & Valuation

This table compares Liberty Energy and Baker Hughes”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Liberty Energy	$4.32 billion	0.44	$316.01 million	$1.30	8.93
Baker Hughes	$27.83 billion	1.54	$2.98 billion	$3.06	14.22

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Liberty Energy and Baker Hughes, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Liberty Energy	0	8	3	3	2.64
Baker Hughes	0	3	18	0	2.86

Liberty Energy currently has a consensus target price of $15.15, indicating a potential upside of 30.49%. Baker Hughes has a consensus target price of $51.47, indicating a potential upside of 18.30%. Given Liberty Energy’s higher probable upside, analysts plainly believe Liberty Energy is more favorable than Baker Hughes.

Institutional & Insider Ownership

98.2% of Liberty Energy shares are held by institutional investors. Comparatively, 92.1% of Baker Hughes shares are held by institutional investors. 1.9% of Liberty Energy shares are held by insiders. Comparatively, 0.3% of Baker Hughes shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Liberty Energy pays an annual dividend of $0.32 per share and has a dividend yield of 2.8%. Baker Hughes pays an annual dividend of $0.92 per share and has a dividend yield of 2.1%. Liberty Energy pays out 24.6% of its earnings in the form of a dividend. Baker Hughes pays out 30.1% 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. Liberty Energy has increased its dividend for 2 consecutive years and Baker Hughes has increased its dividend for 4 consecutive years. Liberty Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Baker Hughes beats Liberty Energy on 12 of the 18 factors compared between the two stocks.

About Liberty Energy

Liberty Energy Inc. provides hydraulic services and related technologies to onshore oil and natural gas exploration, and production companies in North America. The company offers hydraulic fracturing services, including complementary services, such as wireline services, proppant delivery solutions, field gas processing and treating, compressed natural gas (CNG) delivery, data analytics, related goods comprising sand mine operations, and technologies; and well site fueling and logistics. As of as of December 31, 2023, the company owned and operated a fleet of approximately 40 active hydraulic fracturing; and two sand mines in the Permian Basin. In addition, the company provides services primarily in the Permian Basin, the Williston Basin, the Eagle Ford Shale, the Haynesville Shale, the Appalachian Basin (Marcellus Shale and Utica Shale), the Western Canadian Sedimentary Basin, the Denver-Julesburg Basin (the DJ Basin), and the Anadarko Basin. Liberty Energy Inc. was formerly known as Liberty Oilfield Services Inc. and changed its name to Liberty Energy Inc. in April 2022. The company was founded in 2011 and is headquartered in Denver, Colorado.

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.