Borr Drilling (NYSE:BORR) vs. Baker Hughes (NASDAQ:BKR) Head to Head Analysis

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

Analyst Ratings

This is a breakdown of recent recommendations for Baker Hughes and Borr Drilling, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Baker Hughes	0	4	17	0	2.81
Borr Drilling	1	2	0	2	2.60

Baker Hughes currently has a consensus target price of $71.71, indicating a potential upside of 21.43%. Borr Drilling has a consensus target price of $5.27, indicating a potential upside of 23.49%. Given Borr Drilling’s higher possible upside, analysts plainly believe Borr Drilling is more favorable than Baker Hughes.

Volatility & Risk

Baker Hughes has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500. Comparatively, Borr Drilling has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Baker Hughes	$27.73 billion	2.11	$2.59 billion	$3.10	19.05
Borr Drilling	$1.02 billion	1.32	$45.00 million	($0.78)	-5.47

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Baker Hughes	11.17%	13.85%	5.80%
Borr Drilling	-23.98%	-5.95%	-1.84%

Dividends

Baker Hughes pays an annual dividend of $0.92 per share and has a dividend yield of 1.6%. Borr Drilling pays an annual dividend of $0.10 per share and has a dividend yield of 2.3%. Baker Hughes pays out 29.7% of its earnings in the form of a dividend. Borr Drilling pays out -12.8% 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. Borr Drilling is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

92.1% of Baker Hughes shares are held by institutional investors. Comparatively, 83.1% of Borr Drilling shares are held by institutional investors. 0.2% of Baker Hughes shares are held by insiders. Comparatively, 7.9% of Borr Drilling shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Baker Hughes beats Borr Drilling on 12 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 Borr Drilling

Borr Drilling Limited operates as an offshore shallow-water drilling contractor to the oil and gas industry worldwide. The company owns, contracts, and operates jack-up drilling rigs for operations in shallow-water areas, including the provision of related equipment and work crews to conduct oil and gas drilling and workover operations for exploration and production. It serves oil and gas exploration and production companies, such as integrated oil companies, state-owned national oil companies, and independent oil and gas companies. The company was formerly known as Magni Drilling Limited and changed its name to Borr Drilling Limited in December 2016. Borr Drilling Limited was incorporated in 2016 and is based in Hamilton, Bermuda.