BHP Group (BHP) AI Stock Analysis

• Market Cap: $137.46B
• Dividend Yield: 4.6%
• Average Volume (3M): 3.18M
• Price to Earnings (P/E): 15.1
• Beta (1Y): 0.90
• Revenue Growth: -7.68%
• EPS Growth: 14.56%
• Country: US
• Employees: 38,962
• Sector: Basic Materials
• Sector Strength: 56
• Industry: Industrial Materials
• EPS (TTM): 2.00
• Shares Outstanding: 2,537,996,000
• 10 Day Avg. Volume: 2,661,730
• 30 Day Avg. Volume: 3,175,438
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 2.59
• Enterprise Value/Gross Profit: 4.48
• Enterprise Value/Ebitda: 5.41
• 1Y Price Target: $47.00
• Price Target Upside: -13.76% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 76 Outperform
• Price Target: $55.00 ▲(0.92% Upside)

BHP's strong financial performance and attractive valuation are the primary drivers of its stock score. The neutral technical indicators suggest a lack of clear momentum, warranting monitoring of market conditions. The absence of recent earnings call data limits insights into management’s strategic direction.

Positive Factors

Sector Sentiment

BHP's share price has moved up to the £20 target price, supported by signs of improving sentiment in the sector, particularly given iron ore is back above US$100/t.

Negative Factors

Project Costs

Jansen Stage 1 capital expenditure has increased by 22-29% to US$7.0-7.4B due to cost inflation, design changes, and lower production during construction.

Project Delays

Stage 2 of the Jansen project is facing potential delays in its start-up timeline, with the capex changes currently unknown.

Valuation Concerns

The stock has been downgraded to Market Perform due to multiples looking less compelling, with free cash flow yields now below average.

BHP Group Business Overview & Revenue Model

Company Description

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 operates through Copper, Iron Ore, and Coal segments. It engages in the mining of copper, uranium, gold, zinc, lead, molybdenum, silver, iron ore, cobalt, and metallurgical and energy coal. The company is also involved in the mining, smelting, and refining of nickel, as well as potash development activities. In addition, it provides towing, freight, marketing and trading, marketing support, finance, administrative, and other services. The company was founded in 1851 and is headquartered in Melbourne, Australia.

How the Company Makes Money

BHP Group makes money primarily through the exploration, production, and sale of natural resources. Its key revenue streams include the sale of iron ore, copper, coal, and petroleum products. Iron ore is one of the largest contributors to the company's revenue, driven by demand from steel manufacturers. Copper, essential for electrical applications and renewable energy systems, also represents a significant part of BHP's portfolio. Coal, both metallurgical and thermal, is supplied to global markets for steel production and energy generation. BHP also generates income from its oil and gas operations, which involve the exploration and extraction of petroleum products. The company's earnings are influenced by commodity prices, demand from key markets like China, and strategic partnerships and joint ventures that enhance its global reach and operational efficiency.

BHP Group Financial Statement Overview

Summary

BHP Group has a strong financial position with solid profitability margins and a stable balance sheet. The cash flow generation is robust, supporting operations and strategic initiatives, despite a concerning decline in revenue growth.

Income Statement

BHP Group has demonstrated a strong financial performance with a solid gross profit margin of 82.3% and a respectable net profit margin of 14.1% for the 2024 period. However, the revenue growth has been a concern with a decline of 14% from 2022 to 2024. EBIT and EBITDA margins remain solid at 31.3% and 42.0% respectively, indicating efficient operational management. The declining trend in revenue requires attention to ensure future stability.

Balance Sheet

The company's balance sheet is robust, with a debt-to-equity ratio of 0.45 for 2024, showcasing a conservative leverage approach. Return on Equity (ROE) is relatively strong at 17.6%, indicating effective use of shareholder capital. The equity ratio stands at 43.8%, reflecting a healthy level of equity financing. Overall, the balance sheet stability supports sustainable operations.

Cash Flow

BHP Group's cash flow statements reveal a commendable operating cash flow to net income ratio of 2.62, indicating strong cash generation capabilities. Free cash flow growth from 2023 to 2024 is modest at 2.0%. The company's free cash flow to net income ratio of 1.50 underscores its ability to generate ample free cash relative to net income. However, the lower growth in free cash flow merits monitoring.

Breakdown	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	56.03B	53.82B	65.10B	56.92B	42.93B
Gross Profit	46.10B	27.66B	39.71B	34.04B	20.43B
EBITDA	23.52B	27.12B	38.64B	30.23B	18.05B
Net Income	7.90B	12.92B	22.74B	11.30B	7.96B
Balance Sheet
Total Assets	102.36B	101.30B	95.17B	108.93B	105.73B
Cash, Cash Equivalents and Short-Term Investments	12.65B	12.46B	17.54B	15.25B	13.46B
Total Debt	20.18B	22.34B	16.43B	20.98B	27.05B
Total Liabilities	53.24B	52.77B	46.40B	53.32B	53.56B
Stockholders Equity	44.81B	44.50B	44.96B	51.26B	47.87B
Cash Flow
Free Cash Flow	11.85B	11.62B	26.06B	21.43B	8.07B
Operating Cash Flow	20.66B	18.70B	32.17B	27.23B	15.71B
Investing Cash Flow	-8.76B	-13.06B	-6.96B	-7.84B	-7.62B
Financing Cash Flow	-11.67B	-10.31B	-22.77B	-17.92B	-9.75B

BHP Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 54.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BHP, the sentiment is Positive. The current price of 54.5 is above the 20-day moving average (MA) of 52.74, above the 50-day MA of 51.13, and above the 200-day MA of 49.79, indicating a bullish trend. The MACD of 0.77 indicates Negative momentum. The RSI at 60.91 is Neutral, neither overbought nor oversold. The STOCH value of 66.70 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for BHP.

BHP Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BHP	76 Outperform	$137.46B	15.13	19.51%	4.60%	-7.68%	14.56%
RIO	75 Outperform	$102.71B	9.54	18.18%	6.15%	0.03%	-3.78%
VALE	74 Outperform	$41.51B	8.06	13.49%	8.25%	-12.89%	-46.86%
MP	63 Neutral	$12.27B	―	-9.57%	―	39.42%	-172.40%
NEXA	50 Neutral	$647.23M	―	-9.63%	2.09%	8.66%	66.06%
CMP	46 Neutral	$785.83M	―	-40.17%	1.61%	7.27%	27.35%
Sector *	44 Neutral	AU$1.54B	-7.44	-18.84%	4.47%	-3.00%	-40.37%