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BHP Group Ltd ADR BHP

Morningstar Rating
$57.51 +0.43 (0.74%)
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Company Report

BHP Earnings: Stronger Prices Drive a Sound Result, but Higher Samarco Provision Disappointing

Increased costs for the Samarco dam failure lead to a modest reduction in our fair value estimate for no-moat BHP to AUD 42 per share, down from AUD 43. BHP owns the Samarco iron ore mine in a joint venture with no-moat Vale. While the company reiterated guidance, we raise our forecast fiscal 2024 unit cash costs for its Western Australian Iron Ore operations to USD 19 per metric ton, roughly the top end of guidance. We also now forecast unit cash costs of USD 1.70 per pound at its 57.5%-owned Escondida copper mine in Chile, also at the top end of guidance. We had previously assumed unit cash costs at around the midpoint of guidance for these two businesses, but raise our assumed costs, given inflation headwinds are still prevalent.

Price vs Fair Value

BHP is trading at a 4% premium.
Price
$57.09
Fair Value
$42.00
Uncertainty
Medium
1-Star Price
$73.67
5-Star Price
$97.40
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
$57.09
Day Range
$57.4757.81
52-Week Range
$54.3069.11
Bid/Ask
$57.47 / $57.49
Market Cap
$145.63 Bil
Volume/Avg
457,337 / 2.5 Mil

Key Statistics

Price/Earnings (Normalized)
10.70
Price/Sales
2.62
Dividend Yield (Trailing)
5.96%
Dividend Yield (Forward)
5.96%
Total Yield
5.96%

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 U.S. 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
FMG
RIO
Price/Earnings (Normalized)
10.709.5111.40
Price/Book Value
3.492.812.51
Price/Sales
2.622.872.48
Price/Cash Flow
6.786.158.10
Price/Earnings
BHP
FMG
RIO

Financial Strength

Metric
BHP
FMG
RIO
Quick Ratio
1.082.261.04
Current Ratio
1.572.841.69
Interest Coverage
7.5924.668.04
Quick Ratio
BHP
FMG
RIO

Profitability

Metric
BHP
FMG
RIO
Return on Assets (Normalized)
13.90%22.58%11.84%
Return on Equity (Normalized)
31.62%35.67%22.48%
Return on Invested Capital (Normalized)
21.70%27.74%19.38%
Return on Assets
BHP
FMG
RIO
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