BHP Stock – Key Insights for Investors

By Kim Brooks • Thursday, September 12 15:06 • Permanent Link

One of the standouts of today's afternoon trading session was BHP, which logged a 1.5% performance and outperformed the S&P 500 by 0.0%. The Thermal Coal stock is now trading at $53.59 per share and may still have upside potential because it is still -12.7% under its average target price of $61.38. Analysts have set target prices ranging from $51.0 to $72.0 dollars per share, and have given the stock an average rating of buy.

The market seems to share this optimistic view, since BHP has a short interest of only 0.4% (this is the percentage of the share float that is being shorted). Each short position represents an investor's expectation that the price of the stock will decrease in the future.

Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.

One way to tell how the market is perceiving a stock is to look to its rate of institutional ownership. With their vast resources, hedge funds, pension funds, and wealth managers are able to perform due diligence to a level that most investors cannot. So it follows that their investment decisions may be more educated. But we also know that bankers and portfolio managers can make mistakes too.

So the fact that BHP has a low rate of institutional ownership at 3.8% is not an immediate red flag. It just means that something about the company has kept institutional investors from committing -- or the stock is simply flying under their radar.

In conclusion, we see mixed market sentiment regarding BHP because of an analyst consensus of some upside potential, a buy rating, a very low short interest, and a very small number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.

Here's a snapshot of some important facts to keep in mind about BHP:

The stock has trailing 12 month earnings per share (EPS) of $3.11
BHP has a trailing 12 month Price to Earnings (P/E) ratio of 17.2 compared to the S&P 500 average of 28.21
The company has a Price to Book (P/B) ratio of 6.06 in contrast to the S&P 500's average ratio of 4.71
BHP is a Energy company, and the sector average P/E and P/B ratios are 13.84 and 2.05 respectively

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.