Intrinsic value of Baker Hughes a GE - BHGE

Previous Close

$31.61

  Intrinsic Value

$235.91

stock screener

  Rating & Target

str. buy

+646%

Previous close

$31.61

 
Intrinsic value

$235.91

 
Up/down potential

+646%

 
Rating

str. buy

We calculate the intrinsic value of BHGE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 13.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  27,614
  42,664
  63,804
  92,577
  130,613
  179,562
  241,025
  316,481
  407,235
  514,370
  638,731
  780,910
  941,259
  1,119,913
  1,316,818
  1,531,776
  1,764,478
  2,014,547
  2,281,580
  2,565,173
  2,864,957
  3,180,620
  3,511,920
  3,858,709
  4,220,932
  4,598,640
  4,991,989
  5,401,244
  5,826,776
  6,269,061
Variable operating expenses, $m
  24,657
  36,662
  53,525
  76,477
  106,819
  145,866
  194,895
  255,086
  327,481
  412,943
  509,518
  622,934
  750,845
  893,357
  1,050,430
  1,221,902
  1,407,528
  1,607,010
  1,820,022
  2,046,245
  2,285,384
  2,537,189
  2,801,468
  3,078,102
  3,367,049
  3,668,347
  3,982,123
  4,308,586
  4,648,035
  5,000,847
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  24,657
  36,662
  53,525
  76,477
  106,819
  145,866
  194,895
  255,086
  327,481
  412,943
  509,518
  622,934
  750,845
  893,357
  1,050,430
  1,221,902
  1,407,528
  1,607,010
  1,820,022
  2,046,245
  2,285,384
  2,537,189
  2,801,468
  3,078,102
  3,367,049
  3,668,347
  3,982,123
  4,308,586
  4,648,035
  5,000,847
Operating income, $m
  2,958
  6,002
  10,279
  16,100
  23,794
  33,696
  46,130
  61,395
  79,754
  101,427
  129,214
  157,976
  190,414
  226,555
  266,389
  309,874
  356,949
  407,538
  461,558
  518,928
  579,573
  643,431
  710,452
  780,607
  853,883
  930,293
  1,009,866
  1,092,657
  1,178,741
  1,268,215
EBITDA, $m
  6,650
  10,274
  15,365
  22,294
  31,454
  43,242
  58,044
  76,215
  98,070
  123,870
  153,819
  188,058
  226,674
  269,697
  317,116
  368,882
  424,921
  485,142
  549,449
  617,744
  689,938
  765,955
  845,739
  929,252
  1,016,483
  1,107,442
  1,202,168
  1,300,725
  1,403,201
  1,509,712
Interest expense (income), $m
  0
  451
  1,823
  3,813
  6,609
  10,415
  15,445
  21,919
  30,048
  40,027
  52,030
  66,199
  82,647
  101,451
  122,658
  146,286
  172,328
  200,757
  231,533
  264,606
  299,923
  337,430
  377,078
  418,826
  462,642
  508,507
  556,413
  606,367
  658,390
  712,516
  768,795
Earnings before tax, $m
  2,507
  4,179
  6,466
  9,490
  13,379
  18,251
  24,211
  31,347
  39,727
  49,397
  63,014
  75,329
  88,964
  103,898
  120,103
  137,547
  156,192
  176,004
  196,951
  219,005
  242,144
  266,353
  291,626
  317,964
  345,376
  373,879
  403,499
  434,267
  466,225
  499,419
Tax expense, $m
  677
  1,128
  1,746
  2,562
  3,612
  4,928
  6,537
  8,464
  10,726
  13,337
  17,014
  20,339
  24,020
  28,052
  32,428
  37,138
  42,172
  47,521
  53,177
  59,131
  65,379
  71,915
  78,739
  85,850
  93,252
  100,947
  108,945
  117,252
  125,881
  134,843
Net income, $m
  1,830
  3,051
  4,720
  6,928
  9,767
  13,324
  17,674
  22,883
  29,000
  36,060
  46,001
  54,990
  64,943
  75,845
  87,675
  100,409
  114,020
  128,483
  143,774
  159,874
  176,765
  194,438
  212,887
  232,114
  252,125
  272,932
  294,554
  317,015
  340,344
  364,576

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  90,539
  139,883
  209,195
  303,531
  428,238
  588,729
  790,246
  1,037,644
  1,335,195
  1,686,460
  2,094,201
  2,560,361
  3,086,096
  3,671,845
  4,317,438
  5,022,217
  5,785,172
  6,605,073
  7,480,589
  8,410,403
  9,393,302
  10,428,261
  11,514,493
  12,651,505
  13,839,122
  15,077,507
  16,367,176
  17,708,996
  19,104,183
  20,554,300
Adjusted assets (=assets-cash), $m
  90,539
  139,883
  209,195
  303,531
  428,238
  588,729
  790,246
  1,037,644
  1,335,195
  1,686,460
  2,094,201
  2,560,361
  3,086,096
  3,671,845
  4,317,438
  5,022,217
  5,785,172
  6,605,073
  7,480,589
  8,410,403
  9,393,302
  10,428,261
  11,514,493
  12,651,505
  13,839,122
  15,077,507
  16,367,176
  17,708,996
  19,104,183
  20,554,300
Revenue / Adjusted assets
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
  0.305
Average production assets, $m
  21,594
  33,363
  49,895
  72,395
  102,139
  140,418
  188,482
  247,488
  318,457
  402,238
  499,488
  610,672
  736,065
  875,772
  1,029,752
  1,197,849
  1,379,821
  1,575,376
  1,784,195
  2,005,965
  2,240,397
  2,487,244
  2,746,322
  3,017,511
  3,300,769
  3,596,136
  3,903,735
  4,223,773
  4,556,539
  4,902,406
Working capital, $m
  6,738
  10,410
  15,568
  22,589
  31,869
  43,813
  58,810
  77,221
  99,365
  125,506
  155,850
  190,542
  229,667
  273,259
  321,304
  373,753
  430,533
  491,550
  556,705
  625,902
  699,050
  776,071
  856,909
  941,525
  1,029,907
  1,122,068
  1,218,045
  1,317,903
  1,421,733
  1,529,651
Total debt, $m
  33,759
  70,618
  122,394
  192,864
  286,020
  405,907
  556,440
  741,246
  963,517
  1,225,912
  1,530,494
  1,878,716
  2,271,440
  2,708,994
  3,191,252
  3,717,722
  4,287,650
  4,900,116
  5,554,126
  6,248,697
  6,982,923
  7,756,037
  8,567,453
  9,416,800
  10,303,950
  11,229,024
  12,192,406
  13,194,746
  14,236,951
  15,320,188
Total liabilities, $m
  67,633
  104,492
  156,268
  226,738
  319,894
  439,781
  590,314
  775,120
  997,391
  1,259,786
  1,564,368
  1,912,590
  2,305,314
  2,742,868
  3,225,126
  3,751,596
  4,321,524
  4,933,990
  5,588,000
  6,282,571
  7,016,797
  7,789,911
  8,601,327
  9,450,674
  10,337,824
  11,262,898
  12,226,280
  13,228,620
  14,270,825
  15,354,062
Total equity, $m
  22,906
  35,390
  52,926
  76,793
  108,344
  148,948
  199,932
  262,524
  337,804
  426,674
  529,833
  647,771
  780,782
  928,977
  1,092,312
  1,270,621
  1,463,649
  1,671,083
  1,892,589
  2,127,832
  2,376,506
  2,638,350
  2,913,167
  3,200,831
  3,501,298
  3,814,609
  4,140,896
  4,480,376
  4,833,358
  5,200,238
Total liabilities and equity, $m
  90,539
  139,882
  209,194
  303,531
  428,238
  588,729
  790,246
  1,037,644
  1,335,195
  1,686,460
  2,094,201
  2,560,361
  3,086,096
  3,671,845
  4,317,438
  5,022,217
  5,785,173
  6,605,073
  7,480,589
  8,410,403
  9,393,303
  10,428,261
  11,514,494
  12,651,505
  13,839,122
  15,077,507
  16,367,176
  17,708,996
  19,104,183
  20,554,300
Debt-to-equity ratio
  1.470
  2.000
  2.310
  2.510
  2.640
  2.730
  2.780
  2.820
  2.850
  2.870
  2.890
  2.900
  2.910
  2.920
  2.920
  2.930
  2.930
  2.930
  2.930
  2.940
  2.940
  2.940
  2.940
  2.940
  2.940
  2.940
  2.940
  2.950
  2.950
  2.950
Adjusted equity ratio
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,830
  3,051
  4,720
  6,928
  9,767
  13,324
  17,674
  22,883
  29,000
  36,060
  46,001
  54,990
  64,943
  75,845
  87,675
  100,409
  114,020
  128,483
  143,774
  159,874
  176,765
  194,438
  212,887
  232,114
  252,125
  272,932
  294,554
  317,015
  340,344
  364,576
Depreciation, amort., depletion, $m
  3,692
  4,272
  5,086
  6,195
  7,660
  9,546
  11,913
  14,820
  18,316
  22,443
  24,605
  30,082
  36,259
  43,141
  50,727
  59,007
  67,972
  77,605
  87,891
  98,816
  110,364
  122,524
  135,287
  148,646
  162,599
  177,150
  192,302
  208,068
  224,460
  241,498
Funds from operations, $m
  5,522
  7,323
  9,806
  13,123
  17,427
  22,869
  29,588
  37,703
  47,317
  58,503
  70,606
  85,073
  101,203
  118,987
  138,402
  159,416
  181,992
  206,088
  231,666
  258,690
  287,129
  316,962
  348,174
  380,760
  414,724
  450,081
  486,856
  525,083
  564,804
  606,074
Change in working capital, $m
  2,527
  3,672
  5,158
  7,021
  9,281
  11,944
  14,997
  18,411
  22,144
  26,141
  30,344
  34,692
  39,125
  43,591
  48,045
  52,450
  56,779
  61,017
  65,156
  69,197
  73,147
  77,022
  80,837
  84,616
  88,382
  92,161
  95,977
  99,858
  103,830
  107,918
Cash from operations, $m
  2,996
  3,651
  4,648
  6,102
  8,146
  10,925
  14,591
  19,292
  25,173
  32,362
  40,262
  50,381
  62,078
  75,395
  90,357
  106,967
  125,213
  145,071
  166,510
  189,493
  213,982
  239,941
  267,337
  296,143
  326,342
  357,921
  390,879
  425,225
  460,974
  498,156
Maintenance CAPEX, $m
  -665
  -1,064
  -1,644
  -2,458
  -3,566
  -5,031
  -6,917
  -9,285
  -12,192
  -15,688
  -19,815
  -24,605
  -30,082
  -36,259
  -43,141
  -50,727
  -59,007
  -67,972
  -77,605
  -87,891
  -98,816
  -110,364
  -122,524
  -135,287
  -148,646
  -162,599
  -177,150
  -192,302
  -208,068
  -224,460
New CAPEX, $m
  -8,099
  -11,769
  -16,532
  -22,500
  -29,744
  -38,279
  -48,064
  -59,007
  -70,969
  -83,780
  -97,250
  -111,184
  -125,393
  -139,707
  -153,980
  -168,097
  -181,973
  -195,555
  -208,819
  -221,770
  -234,431
  -246,848
  -259,077
  -271,189
  -283,258
  -295,367
  -307,599
  -320,037
  -332,766
  -345,867
Cash from investing activities, $m
  -8,764
  -12,833
  -18,176
  -24,958
  -33,310
  -43,310
  -54,981
  -68,292
  -83,161
  -99,468
  -117,065
  -135,789
  -155,475
  -175,966
  -197,121
  -218,824
  -240,980
  -263,527
  -286,424
  -309,661
  -333,247
  -357,212
  -381,601
  -406,476
  -431,904
  -457,966
  -484,749
  -512,339
  -540,834
  -570,327
Free cash flow, $m
  -5,768
  -9,182
  -13,527
  -18,856
  -25,164
  -32,385
  -40,390
  -48,999
  -57,988
  -67,106
  -76,803
  -85,408
  -93,398
  -100,571
  -106,765
  -111,857
  -115,767
  -118,455
  -119,914
  -120,168
  -119,266
  -117,272
  -114,265
  -110,332
  -105,563
  -100,046
  -93,869
  -87,115
  -79,859
  -72,171
Issuance/(repayment) of debt, $m
  25,410
  36,860
  51,776
  70,469
  93,156
  119,887
  150,534
  184,806
  222,271
  262,395
  304,582
  348,222
  392,724
  437,555
  482,258
  526,470
  569,928
  612,466
  654,010
  694,571
  734,226
  773,114
  811,416
  849,348
  887,149
  925,074
  963,383
  1,002,339
  1,042,205
  1,083,237
Issuance/(repurchase) of shares, $m
  6,799
  9,433
  12,816
  16,939
  21,784
  27,281
  33,310
  39,708
  46,280
  52,810
  57,158
  62,948
  68,068
  72,349
  75,660
  77,900
  79,007
  78,952
  77,731
  75,369
  71,909
  67,407
  61,930
  55,550
  48,342
  40,380
  31,732
  22,465
  12,638
  2,303
Cash from financing (excl. dividends), $m  
  32,209
  46,293
  64,592
  87,408
  114,940
  147,168
  183,844
  224,514
  268,551
  315,205
  361,740
  411,170
  460,792
  509,904
  557,918
  604,370
  648,935
  691,418
  731,741
  769,940
  806,135
  840,521
  873,346
  904,898
  935,491
  965,454
  995,115
  1,024,804
  1,054,843
  1,085,540
Total cash flow (excl. dividends), $m
  26,441
  37,111
  51,065
  68,553
  89,776
  114,782
  143,453
  175,514
  210,563
  248,099
  284,937
  325,762
  367,394
  409,333
  451,152
  492,513
  533,168
  572,962
  611,827
  649,772
  686,869
  723,249
  759,080
  794,566
  829,929
  865,408
  901,245
  937,689
  974,984
  1,013,369
Retained Cash Flow (-), $m
  -8,629
  -12,484
  -17,536
  -23,867
  -31,551
  -40,604
  -50,984
  -62,591
  -75,281
  -88,870
  -103,158
  -117,939
  -133,011
  -148,195
  -163,335
  -178,309
  -193,028
  -207,435
  -221,506
  -235,243
  -248,674
  -261,844
  -274,817
  -287,664
  -300,467
  -313,311
  -326,286
  -339,480
  -352,982
  -366,879
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  17,811
  24,627
  33,529
  44,685
  58,225
  74,178
  92,469
  112,923
  135,283
  159,229
  181,779
  207,823
  234,383
  261,138
  287,818
  314,204
  340,140
  365,528
  390,322
  414,529
  438,196
  461,404
  484,263
  506,902
  529,462
  552,096
  574,959
  598,209
  622,002
  646,490
Discount rate, %
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
  16,819
  21,837
  27,753
  34,308
  41,183
  47,984
  54,283
  59,661
  63,763
  66,324
  66,248
  65,565
  63,290
  59,633
  54,877
  49,347
  43,375
  37,275
  31,321
  25,732
  20,666
  16,221
  12,437
  9,311
  6,801
  4,844
  3,361
  2,270
  1,491
  951
Current shareholders' claim on cash, %
  65.7
  45.2
  32.4
  24.0
  18.3
  14.3
  11.5
  9.4
  7.9
  6.8
  5.9
  5.2
  4.7
  4.2
  3.9
  3.6
  3.4
  3.2
  3.0
  2.9
  2.8
  2.7
  2.7
  2.6
  2.6
  2.5
  2.5
  2.5
  2.5
  2.5

FINANCIAL RATIOS  of  Baker Hughes a GE (BHGE)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

BHGE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BHGE stock intrinsic value calculation we used $17259 million for the last fiscal year's total revenue generated by Baker Hughes a GE. The default revenue input number comes from 0001 income statement of Baker Hughes a GE. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BHGE stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.9%, whose default value for BHGE is calculated based on our internal credit rating of Baker Hughes a GE, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Baker Hughes a GE.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BHGE stock the variable cost ratio is equal to 95%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BHGE stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Baker Hughes a GE.

Corporate tax rate of 27% is the nominal tax rate for Baker Hughes a GE. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BHGE stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BHGE are equal to 78.2%.

Life of production assets of 20.3 years is the average useful life of capital assets used in Baker Hughes a GE operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BHGE is equal to 24.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $14277 million for Baker Hughes a GE - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 411.652 million for Baker Hughes a GE is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Baker Hughes a GE at the current share price and the inputted number of shares is $13.0 billion.

COMPANY NEWS

▶ Is Baker Hughes, a GE Company a Buy?   [Sep-12-18 09:17AM  Motley Fool]
▶ [$$] U.S. Oil-Rig Count Down by 2 in Latest Week   [Sep-07-18 01:30PM  The Wall Street Journal]
▶ Here's The Latest Sign That Permian Shale Oil Is Slowing Down   [Sep-05-18 04:11PM  Investor's Business Daily]
▶ [$$] U.S. Oil-Rig Count Rises in Latest Week   [Aug-31-18 01:20PM  The Wall Street Journal]
▶ Oil Prices Inch Lower As Rig Count Rises   [01:19PM  Oilprice.com]
▶ Best Energy ETFs and Stocks of Last Week   [Aug-27-18 01:50PM  InvestorPlace]
▶ Oil Prices Rise As Rig Count Slips   [Aug-24-18 01:20PM  Oilprice.com]
▶ 3 Pros, 3 Cons for Beleaguered General Electric Stock   [Aug-21-18 11:23AM  InvestorPlace]
▶ [$$] U.S. Oil-Rig Count Unchanged in Latest Week   [Aug-17-18 02:24PM  The Wall Street Journal]
▶ Baker Hughes: US Drillers Add Most Oil Rigs Since May   [Aug-09-18 08:00PM  Rigzone.com]
▶ Baker Hughes, a GE company Announces July 2018 Rig Counts   [Aug-07-18 06:00AM  Business Wire]
▶ Stocks - Facebook Jumps Midday; T-Mobile, Sprint Rise   [Aug-06-18 03:00PM  Investing.com]
▶ Oil Prices Slip As Rig Count Inches Higher   [Jul-27-18 01:15PM  Oilprice.com]
▶ Major Houston oil field services CEOs sound off on Permian Basin pipeline constraints   [Jul-25-18 03:27PM  American City Business Journals]
▶ [$$] Global Oil Industry Prepares for a Revival   [Jul-20-18 07:23PM  The Wall Street Journal]
▶ [$$] Global Oil Industry Prepares for a Revival   [02:15PM  The Wall Street Journal]
▶ [$$] Baker Hughes Reports Loss   [08:15AM  The Wall Street Journal]
▶ Schlumberger, Baker Hughes Set Sights on 'Healthy' 2H   [Jul-19-18 08:00PM  Rigzone.com]
▶ Baker Hughes GE to sell Natural Gas Solutions businesses for $375M   [Jul-18-18 12:59PM  American City Business Journals]
▶ U.S., Canadian Rig Count Rises After Tumultuous Week   [Jul-13-18 01:25PM  Oilprice.com]
▶ [$$] U.S. Oil-Rig Count Up By Five in Latest Week   [01:27PM  The Wall Street Journal]
▶ [$$] What the Surge in Energy Stocks Means   [Jun-30-18 12:01AM  Barrons.com]
▶ Oil Rig Count Falls Amid Stagnating Production   [Jun-29-18 01:13PM  Oilprice.com]
▶ Does GE Finally Have the Right CEO?   [11:35AM  Barrons.com]

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