Baker Hughes Q4 EPS Rises 11% with Record $35.9B RPO and $1.34B Free Cash Flow
Baker Hughes reported fourth-quarter adjusted EPS of $0.78, up 11% year-over-year, on flat $7.4B revenue and $7.9B in orders, including $4.0B for its IET segment. The company achieved record full-year RPO of $35.9B (IET $32.4B), generated $1.34B free cash flow, and forecast mid-single-digit organic Adjusted EBITDA growth in 2026.
1. Significant Revenue Opportunity Identified in Venezuela
Baker Hughes executives highlighted a major untapped revenue stream in Venezuela, estimating that restoring operations to pre-sanctions capacity could generate several hundred million dollars in annual service revenues within three years. Management emphasized that ensuring robust safety protocols, secure working conditions for field personnel and expatriate staff, and clear legal and regulatory guidelines are prerequisites for expansion. The company has already engaged in preliminary security assessments at two offshore drilling sites and is in active discussions with Venezuela’s national oil company to negotiate service contracts covering drilling support, well intervention and equipment maintenance.
2. Fourth-Quarter and Full-Year 2025 Financial Results Exceed Expectations
In Q4 2025, Baker Hughes delivered adjusted earnings per share of $0.78, up 11% year-over-year, on flat revenue of $7.39 billion. The Industrial & Energy Technology (IET) unit drove performance, posting $4.0 billion in orders and a record year-end backlog of $32.4 billion, while traditional Oilfield Services & Equipment (OFSE) remained under pressure from sustained lower upstream capital expenditures. Full-year adjusted EBITDA reached $4.83 billion, a 5% increase, supported by operating cash flow of $3.81 billion and free cash flow of $2.73 billion. Management reiterated guidance for mid-single-digit organic EBITDA growth in 2026 and stable OFSE margins, with IET margin expansion toward a 20% target.
3. Valuation Considered Fully Priced as Segment Headwinds Persist
Leading equity analysts downgraded Baker Hughes to Sell, citing a stretched valuation at over 20x forward earnings and limited catalysts beyond 2026. The firm’s guidance for next year anticipates a modest 2% revenue decline and muted EPS growth, reflecting continued headwinds in oilfield services. While the IET segment benefits from secular LNG and data-center power demands, subdued upstream capex budgets and oil price volatility constrain upside in OFSE. Analysts noted that the Venezuela opportunity, though positive, represents only a modest offset to overall growth challenges and may not move the valuation needle materially.