Baker Hughes Inc. (BHI - Analyst Report) reported third-quarter 2014 adjusted earnings from continuing operations of $1.02 a share, which came below the Zacks Consensus Estimate of $1.15. The quarterly figure rose 25.9% from the year-ago profit level of 81 cents a share. The year-over-year growth stemmed mainly from growth in revenues especially from North America.

Baker Hughes Incorporated - Earnings Surprise | FindTheBest

Total revenue of $6,250 million rose 8.0% from the year-ago level of $5,787 million. However, this was lower than the Zacks Consensus Estimate of $6,292 million.

Third-Quarter Segmental Highlights

Of Baker Hughes' total quarterly revenue, North America, Europe/Africa/Russia/Caspian, Middle East/Asia-Pacific and Latin America accounted for 51%, 18%, 17% and 9%, respectively. The remainder was generated by the Industrial Services segment.

An improvement in before-tax profit was noticed in North America and Latin America business segments. North America recorded a profit before-tax margin of 12% (compared with 10% in the year-earlier quarter) and Latin America margin was 12% (versus a before-tax loss). Pre-tax margin at Europe/Africa/Russia/Caspian segment came in at 8% (versus 17% in the year-earlier quarter) and Middle East/Asia-Pacific region margin was 14% (versus 15%). Also, the Industrial Services segment registered a pre-tax margin of 11% (versus 12%).

Liquidity

At the third-quarter end, Baker Hughes had $1,209.0 million in cash and cash equivalents, while long-term debt was $3,894.0 million, representing a debt-to-capitalization ratio of approximately 18%. The company's capital expenditures were $425.0 million in the quarter.

The company generated $725 million of free cash flow in the quarter under review and repurchased 2.9 million shares for $200 million. This leaves $1.05 billion remaining under the previously announced authorization to repurchase shares.

Rank

Baker Hughes, the world's third-largest oilfield services provider following Schlumberger Ltd. (SLB - Analyst Report) and Halliburton Co. (HAL - Analyst Report), holds a Zacks Rank #4 (Sell). Better-ranked stocks in the oil and gas sector include Enbridge Energy Management LLC (EEQ - Snapshot Report). This stock sports a Zacks Rank #1 (Strong Buy).