Comparing Baker Hughes (NASDAQ:BKR) and Schlumberger (NYSE:SLB)

Baker Hughes (NASDAQ:BKR) and Schlumberger (NYSE:SLB) are both large-cap energy companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, analyst recommendations, risk, profitability and earnings.

Dividends

Baker Hughes pays an annual dividend of $0.92 per share and has a dividend yield of 2.0%. Schlumberger pays an annual dividend of $1.14 per share and has a dividend yield of 3.2%. Baker Hughes pays out 30.1% of its earnings in the form of a dividend. Schlumberger pays out 39.0% 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. Baker Hughes has raised its dividend for 4 consecutive years and Schlumberger has raised its dividend for 5 consecutive years. Schlumberger is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

92.1% of Baker Hughes shares are owned by institutional investors. Comparatively, 82.0% of Schlumberger shares are owned by institutional investors. 0.3% of Baker Hughes shares are owned by company insiders. Comparatively, 0.3% of Schlumberger shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Baker Hughes	$27.83 billion	1.62	$2.98 billion	$3.06	14.92
Schlumberger	$36.29 billion	1.33	$4.46 billion	$2.92	12.25

Schlumberger has higher revenue and earnings than Baker Hughes. Schlumberger 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 current ratings and price targets for Baker Hughes and Schlumberger, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Baker Hughes	0	3	20	0	2.87
Schlumberger	0	4	15	2	2.90

Baker Hughes currently has a consensus target price of $52.29, indicating a potential upside of 14.56%. Schlumberger has a consensus target price of $52.86, indicating a potential upside of 47.80%. Given Schlumberger’s stronger consensus rating and higher possible upside, analysts plainly believe Schlumberger is more favorable than Baker Hughes.

Volatility & Risk

Baker Hughes has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500. Comparatively, Schlumberger has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500.

Profitability

This table compares Baker Hughes and Schlumberger’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Baker Hughes	11.04%	14.56%	6.53%
Schlumberger	11.53%	20.99%	9.34%

Summary

Schlumberger beats Baker Hughes on 11 of the 18 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 Schlumberger

Schlumberger Limited engages in the provision of technology for the energy industry worldwide. The company operates through four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems. The company provides field development and hydrocarbon production, carbon management, and integration of adjacent energy systems; reservoir interpretation and data processing services for exploration data; and well construction and production improvement services and products. It also offers subsurface geology and fluids evaluation information; open and cased hole services; exploration and production pressure, and flow-rate measurement services; and pressure pumping, well stimulation, and coiled tubing equipment solutions. In addition, the company offers mud logging, directional drilling, measurement-while-drilling, and logging-while-drilling services, as well as engineering support services; supplies drilling fluid systems; designs, manufactures, and markets roller cone and fixed cutter drill bits; bottom-hole-assembly and borehole enlargement technologies; well cementing products and services; well planning, well drilling, engineering, supervision, logistics, procurement, and contracting of third parties, as well as drilling rig management solutions; and drilling equipment and services, as well as land drilling rigs and related services. Further, it provides artificial lift production equipment and optimization services; supplies packers, safety valves, sand control technology, and various intelligent well completions technology and equipment; designs and manufactures valves, chokes, actuators, and surface trees; and OneSubsea, an integrated solutions, products, systems, and services, including wellheads, subsea trees, manifolds and flowline connectors, control systems, connectors, and services. The company was formerly known as Socie´te´ de Prospection E´lectrique. Schlumberger Limited was founded in 1926 and is based in Houston, Texas.