Energy technology company Baker Hughes (NASDAQ: BKR) announced better-than-expected revenue in Q3 2026, with revenue rising 14.5% year on year to $8.03 billion. Its non-GAAP profit of $0.70 per share was 13.8% above analysts’ consensus estimates.

For more on Baker Hughes, read our free full research report.

"Alongside continued strong operational results, IET achieved its second-largest order quarter, booking $5.9 billion and driving RPO to another record. Broad-based demand across data centers, space, LNG and gas infrastructure, together with ongoing capacity expansions, reinforces our long-term growth outlook and supports raising our full-year IET order guidance and Horizon 2(1) IET order outlook to $50 billion plus. The resulting backlog growth provides greater revenue visibility while expanding our installed base and long-term aftermarket opportunity."

Revenue growth

A company’s long-term performance can give signals about its business quality. Even a bad business, especially in a cyclical industry, can perform well for a year or so, but a top-tier one should exhibit resilience through cycles. Baker Hughes’s revenue grew at a sluggish 7% compounded annual growth rate over the last five years, falling short of the benchmark for the energy upstream and integrated energy sector.

Even a long stretch in energy can be shaped by a single commodity cycle, so extending the view to ten years adds another perspective and reveals which companies are built to grow regardless of the pricing regime. Baker Hughes’s annualized revenue growth of 9.2% over the last ten years is above its five-year trend.

This quarter, Baker Hughes reported year-on-year revenue growth of 14.5%, and its $8.03 billion of revenue exceeded Wall Street’s consensus estimates by 3.2%.

Adjusted EBITDA margin

Adjusted EBITDA margin strips out accounting distortions tied to depletion and historical drilling spend, providing a clearer view of the cash-generating power of the underlying asset base before financing and reinvestment decisions.

Baker Hughes was profitable over the last five years but held back by its large cost base. Its average EBITDA margin of 16.1% was among the worst in the energy upstream and integrated energy sector.

On the positive side, Baker Hughes’s EBITDA margin rose by 4 percentage points over the last year, as its revenue growth provided operating leverage.

This quarter, Baker Hughes generated an EBITDA margin of 17.6%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable. Adjusted EBITDA beat Wall Street’s consensus estimates by 5.1%.

Free cash flow

Adjusted EBITDA shows how profitable a company’s existing “rock” is before financing and reinvestment, while free cash flow shows how much value remains after paying to replace those wells. Because production declines over time, strong EBITDA can coexist with weak FCF if drilling is expensive or declines are steep. FCF therefore captures both operating efficiency and the cost of sustaining production.

Baker Hughes has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 8.4% over the last five years, slightly better than the broader energy upstream and integrated energy sector.

While the level of free cash flow margins is important, their consistency matters just as much.

Baker Hughes’s ratio of quarterly free cash flow volatility to WTI crude price volatility over the past five years was 4.4 (lower is better), indicating strong insulation from commodity swings. This stability supports superior capital access in downturns and positions Baker Hughes to act as a consolidator when weaker peers are forced to retrench.

Why assess Baker Hughes’s stability relative to WTI crude prices using free cash flow rather than revenue or EBITDA? What ultimately matters is not how much revenue or profit a company earns when prices are high but how much cash it can generate when prices are low. Free cash flow is the superior metric because it includes everything from hedging effectiveness to growth and maintenance capex to management behavior during good times and bad.

Baker Hughes’s free cash flow was $734 million in Q3, equivalent to a 9.1% margin. This cash profitability was in line with the comparable period last year and its five-year average.

Key takeaways from Baker Hughes’s Q3 results

Baker Hughes delivered some important positives in Q3, with revenue topping analysts’ consensus estimates and EPS also beating Wall Street’s consensus. Shares remained flat at $58.25 immediately after the results.

Before investing in Baker Hughes, consider the bigger picture of valuation, business quality and the latest earnings. For more on Baker Hughes, read our full research report here (it’s free).