Take This Into Account Before Investing in BHP

Now trading at a price of $57.26, BHP has moved -1.3% so far today.

BHP Group Limited operates as a resources company in Australia, Europe, China, Japan, India, South Korea, the rest of Asia, North America, South America, and internationally. Based in Melbourne, Australia, the large-cap Basic Materials company has 45,295 full time employees. BHP has offered a 4.6% dividend yield over the last 12 months.

Wider Gross Margins Than the Industry Average of 32.76%:

2020-06-30 2021-06-30 2022-06-30
Revenue (MM) $42,931 $56,921 $65,098
Gross Margins 68.2% 68.0% 77.1%
Operating Margins 32.0% 45.8% 50.5%
Net Margins 18.53% 19.86% 47.47%
Net Income (MM) $7,956 $11,304 $30,900
Net Interest Expense (MM) -996 -1,223 -1,077
Net Interest Expense (MM) -$996 -$1,223 -$1,077
Depreciation & Amort. (MM) -$6,112 -$5,084 -$5,683
Earnings Per Share $3.14 $4.46 $7.19
EPS Growth n/a 42.04% 61.21%
Diluted Shares (MM) 2,534 2,534 2,531
Free Cash Flow (MM) $8,806 $21,622 $26,319
Capital Expenditures (MM) -$6,900 -$5,612 -$5,855
Net Current Assets (MM) -$31,066 -$26,629 -$17,736
Current Ratio 1.45 1.63 1.69
Long Term Debt (MM) $22,036 $18,355 $11,749
Net Debt / EBITDA 0.69 0.2 -0.06

BHP has strong margins with a positive growth rate, exceptional EPS growth, and low leverage. The company also benefits from growing revenues and decreasing reinvestment in the business, wider gross margins than its peer group, and consistent free cash flow. Furthermore, BHP has a decent current ratio.

A Very Low P/E Ratio but Trades Above Its Graham Number:

BHP has a trailing twelve month P/E ratio of 8.2, compared to an average of 10.03 for the Basic Materials sector. Based on its EPS guidance of $2.04, the company has a forward P/E ratio of 29.0. The -8.3% compound average growth rate of BHP's historical and projected earnings per share yields a PEG ratio of -0.99. This indicates that its shares are overvalued.Furthermore, BHP is likely overvalued compared to the book value of its equity, since its P/B ratio of 3.4 is higher than the sector average of 2.08. The company's shares are currently trading 32.5% above their Graham number. Ultimately, BHP's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.

BHP Has No Average Rating Visible In Our Data:

The 4 analysts following BHP have set target prices ranging from $62.0 to $68.0 per share, for an average of $65.5 with a buy rating. As of April 2023, the company is trading -9.8% away from its average target price, indicating that there is an analyst consensus of some upside potential.

The largest shareholder is Fisher Asset Management, LLC, whose 1% stake in the company is worth $1,037,851,899.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.