BHP Group Valuation

Q: What is the Fair Price of BHP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

BHP ($52.27) is trading below our estimate of [[fair value]] ($88.64)

Is BHP undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Below Fair Value
Significantly Below Fair Value
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of BHP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: BHP ($52.27) is trading below our estimate of fair value ($88.64)

Significantly Below Fair Value: BHP is trading below fair value by more than 20%.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for BHP?

Key metric: As BHP is profitable we use its Price-To-Earnings Ratio for relative valuation analysis.

The above table shows the Price to Earnings ratio for BHP. This is calculated by dividing BHP's market cap by their current earnings.
What is BHP's PE Ratio?
PE Ratio	16.7x
Earnings	US$7.90b
Market Cap	US$132.18b

BHP key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.6x
Enterprise Value/EBITDA	5.3x
PEG Ratio	3.4x

Price to Earnings Ratio vs Peers

How does BHP's PE Ratio compare to its peers?

The above table shows the PE ratio for BHP vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	Forward PE	Estimated Growth	Market Cap
Peer Average	31.6x
MTRN Materion	31.4x	27.4%	US$2.3b
SCCO Southern Copper	26.9x	6.2%	US$82.0b
FCX Freeport-McMoRan	31.5x	19.1%	US$63.4b
SHW Sherwin-Williams	36.5x	8.8%	US$93.7b
BHP BHP Group	16.7x	5.0%	US$203.3b

Price-To-Earnings vs Peers: BHP is good value based on its Price-To-Earnings Ratio (16.7x) compared to the peer average (31.6x).

Price to Earnings Ratio vs Industry

How does BHP's PE Ratio compare vs other companies in the US Metals and Mining Industry?

5 Companies	Price / Earnings	Estimated Growth	Market Cap
VITF.F Victoria Gold	2.1x	n/a	US$23.43m
BMXI Brookmount Explorations	0.6x	n/a	US$5.46m
RMRI Rocky Mountain Industrials	0.9x	n/a	US$1.76m
ZCRM.F Zincore Metals	0.5x	n/a	US$852.33k

5 Companies		Estimated Growth	Market Cap

No more companies

Price-To-Earnings vs Industry: BHP is good value based on its Price-To-Earnings Ratio (16.7x) compared to the US Metals and Mining industry average (19.1x).

Price to Earnings Ratio vs Fair Ratio

What is BHP's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

BHP PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	16.7x
Fair PE Ratio	22.5x

Price-To-Earnings vs Fair Ratio: BHP is good value based on its Price-To-Earnings Ratio (16.7x) compared to the estimated Fair Price-To-Earnings Ratio (22.5x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Insufficient data to show price forecast.

Discover undervalued companies

Ecora Resources

UK£159.8m

Operates as a natural resource royalty and streaming company in Australia, North and South America, Europe, and internationally.

ECRA.F

UK£0.85

10.4%

-22.7%

Huntsman

US$3.3b

Manufactures and sells diversified organic chemical products worldwide.

HUN

US$19.42

-1.3%

-22.1%

Chemtrade Logistics Income Fund

CA$1.4b

Offers industrial chemicals and services in Canada, the United States, and South America.

CGIF.F

CA$8.20

4.0%

30.0%