Exploring BHP's Stock Performance

It's been a great morning session for BHP investors, who saw their shares rise 3.1% to a price of $59.54 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.

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

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. The company belongs to the Energy sector, which has an average price to earnings (P/E) ratio of 14.36 and an average price to book (P/B) ratio of 2.1. In contrast, BHP has a trailing 12 month P/E ratio of 20.5 and a P/B ratio of 7.29.

When we divide BHP's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -136.4. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.

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 2,946 2,950 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
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.