Facts You Need to Understand BHP Stock

Now trading at a price of $59.63, BHP has moved 1.5% so far today.

BHP returned gains of 6.8% last year, with its stock price reaching a high of $69.11 and a low of $54.28. Over the same period, the stock underperformed the S&P 500 index by -19.3%. The company's 50-day average price was $58.02. 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 Energy company has 49,089 full time employees. BHP has offered a 2.6% dividend yield over the last 12 months.

Exceptional EPS Growth but an Average Current Ratio:

2018 2019 2020 2021 2022 2023
Revenue (M) $7,397 $44,288 $38,924 $30,527 $25,713 $53,817
Operating Margins 99% 19% 35% 49% 42% 43%
Net Margins 56% 12% 22% 34% 28% 27%
Net Income (M) $4,149 $5,190 $8,736 $10,506 $7,126 $14,324
Net Interest Expense (M) $660 -$524 -$858 -$352 -$652 -$1,531
Depreciation & Amort. (M) $2,888 $3,014 $4,667 $2,851 $2,456 $5,061
Diluted Shares (M) 5,324 5,058 5,058 5,062 5,066 5,066
Earnings Per Share $0.71 $0.96 $1.57 $1.86 $1.27 $2.55
EPS Growth n/a 35.21% 63.54% 18.47% -31.72% 100.79%
Free Cash Flow (M) $7,274 $7,442 $15,706 $13,277 $6,770 $18,701
Current Ratio 2.55 1.62 1.45 1.63 1.69 1.23

BHP's Valuation Is in Line With Its Sector Averages:

BHP has a trailing twelve month P/E ratio of 19.9, compared to an average of 8.53 for the Energy sector. Based on its EPS guidance of $4.05, the company has a forward P/E ratio of 14.3. According to the 28.2% compound average growth rate of BHP's historical and projected earnings per share, the company's PEG ratio is 0.7. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 16.3%. On this basis, the company's PEG ratio is 1.22. This implies that the shares are fairly valued. In contrast, BHP is likely overvalued compared to the book value of its equity, since its P/B ratio of 7.3 is higher than the sector average of 1.78. The company's shares are currently trading 154.4% below 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.

Analysts Give BHP an Average Rating of Buy:

The 5 analysts following BHP have set target prices ranging from $53.0 to $72.75 per share, for an average of $63.35 with a buy rating. The company is trading -5.9% 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 $1,222,485,266.

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.