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BHP Group Ltd BHP

Morningstar Rating
A$43.67 +0.27 (0.62%)
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Company Report

In the Mining Sector, There's Value in Mineral Sands, Gold, Iron Ore, and Thermal Coal

Shares of most of our global mining coverage fell during the quarter, and the average price/fair value estimate has fallen modestly to 1.05 at July 8, 2024 from 1.07 last quarter. While our coverage is close to fairly valued on average, there is a wide dispersion, with no-moat mineral sands miner Iluka the cheapest, trading 30% below fair value at that date. Mineral sands prices are lower, on reduced demand from China’s property sector. Rising interest rates and slowing housing markets in the West are also a near-term headwind. However, longer-term, maturing mines and a lack of large, high-grade, undeveloped resources are likely to support mineral sands prices. Its proposed rare earths refinery in Eneabba is an option, on elevated rare earths prices and potential Western tariffs on Chinese production.

Price vs Fair Value

BHP is trading at a 622% premium.
Price
A$43.67
Fair Value
A$13.60
Uncertainty
Medium
1-Star Price
A$37.97
5-Star Price
A$56.12
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

BHP is a beneficiary of continued global economic growth and demand for the commodities it produces.

Bears

BHP has shown improved capital allocation since its mis-steps during the China boom, but continuing high commodity prices could encourage it to once again aggressively expand output.

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News

Trading Information

Previous Close Price
A$43.40
Day Range
A$43.6243.95
52-Week Range
A$41.9350.84
Bid/Ask
A$43.65 / A$43.70
Market Cap
A$221.47 Bil
Volume/Avg
5.0 Mil / 8.1 Mil

Key Statistics

Price/Earnings (Normalized)
10.90
Price/Sales
2.66
Dividend Yield (Trailing)
5.37%
Dividend Yield (Forward)
5.37%
Total Yield
5.37%

Company Profile

BHP is a global diversified miner mainly supplying iron ore and copper. The merger of BHP Limited and Billiton PLC created the present-day BHP Group. The dual-listed structure from the 2001 BHP and Billiton merger was collapsed in 2022. Major assets include Pilbara iron ore and Escondida copper. Onshore us oil and gas assets were sold in 2018 and the remaining Petroleum assets were spun off and merged with Woodside in 2022, with BHP vesting the Woodside shares it received to BHP shareholders. BHP is growing its nickel business to supply more battery-grade nickel and is also entering the potash market through the development of its Jansen mine in Canada. It also purchased copper miner Oz Minerals in fiscal 2023.
Sector
Basic Materials
Industry
Other Industrial Metals & Mining
Stock Style Box
Large Value
Total Number of Employees
42,319

Competitors

Valuation

Metric
BHP
RIO
VALE
Price/Earnings (Normalized)
10.9011.046.09
Price/Book Value
3.642.431.32
Price/Sales
2.662.401.19
Price/Cash Flow
6.897.843.72
Price/Earnings
BHP
RIO
VALE

Financial Strength

Metric
BHP
RIO
VALE
Quick Ratio
1.081.040.44
Current Ratio
1.571.691.12
Interest Coverage
7.598.048.36
Quick Ratio
BHP
RIO
VALE

Profitability

Metric
BHP
RIO
VALE
Return on Assets (Normalized)
13.90%11.84%10.54%
Return on Equity (Normalized)
31.67%22.48%25.04%
Return on Invested Capital (Normalized)
21.70%19.38%18.68%
Return on Assets
BHP
RIO
VALE
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Economic Moat
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