BHP Group Limited (BHP)
Valuation Overview•Is BHP Group Limited Overvalued or Undervalued?
Trading at a relative discount to industry peers, suggesting a specific risk premium is applied.
High-quality fundamentals with a strong composite quality score of 80/100, backed by robust profitability and solvency.
Analysts remain cautious, with consensus price targets indicating limited room for upside expansion.
Verdict: High-quality compounder, with growth as the only relative weakness.
Wall Street is cautious, forecasting potential downside. This is paired with healthy capital returns, anchored by a strong, well-covered dividend yield.
BHP exhibits elite business quality, driven by exceptional capital efficiency and highly lucrative margins (highlighted by a massive 24.0% ROIC). This is supported by a highly conservative balance sheet featuring strong liquidity and pristine Altman Z safety.
The company is facing top-line contraction (-7.7% 3Y CAGR) however, earnings have severely contracted over the same period. This growth is supported by elite operational efficiency, sustaining an impressive 41.0% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $28.0B | -7.9% | -7.7% | +5.5% | +1.3% | |
| EBITDA | $14.9B | — | -14.5% | — | — | |
| Net Income | $5.6B | +14.2% | -33.7% | — | +16.8% | |
| EPS (Diluted) | $2.22 | +14.1% | -23.6% | +2.8% | +10.8% | |
| Free Cash Flow | $4.3B | -21.7% | -29.1% | +2.8% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 82.7% | 81.3% | 83.2% | 82.4% |
| Operating Margin | 41.0% | 37.4% | 41.8% | 36.2% |
| Net Margin | 20.1% | 18.6% | 24.6% | 16.5% |
| FCF Margin | 19.4% | 20.3% | 27.7% | 26.2% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q1'26Latest | $2.41 | $2.24 | -7.1% | ||
| Q3'25 | $2.09 | $2.12 | +1.4% | ||
| Q1'25 | $1.98 | $1.74 | -12.1% | ||
| Q3'24 | $2.75 | $2.75 | +0.0% | ||
| Q2'24 | $2.61 | $0.37 | -86.0% | ||
| Q4'23 | $2.60 | $2.55 | -1.9% | ||
| Q1'23 | $2.72 | $2.55 | -6.3% | ||
| Q3'22 | $4.51 | $8.46 | +87.6% |
Total return is +90.1% (1Y), outperforming the benchmark by +65.1%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +44.6% | +35.3% | — |
| 1Y | +90.1% | +65.1% | +5.6% |
| 3YCAGR | +15.5% | -3.1% | +13.1% |
| 5YCAGR | +12.1% | -0.5% | +33.4% |
| 10YCAGR | +16.9% | +3.8% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about BHP Group Limited (BHP) valuation, health, and returns.
BHP Group Limited is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. trading near fair value (DCF: $94.26)
BHP Group Limited has multiple valuation anchors: DCF Intrinsic Value: $94.26 | Peer Relative Fair Value: $120.28 | Wall Street Analyst Target: $71.50 (implying -18.6% upside). A convergence of these signals offers higher conviction.
BHP Group Limited displays excellent financial health with a composite quality score of 80/100, supported by a Altman Z-Score of 4.1 (safe zone), Piotroski F-Score of 5/9, Return on Invested Capital (ROIC) of 24.0%.
BHP Group Limited pays a 2.9% dividend yield, covered by a 71% payout ratio with 0 years of growth, supplemented by a 0.0% buyback yield.
BHP Group Limited's current growth trajectory is Stable. The company achieved -7.9% 1Y revenue growth and +14.1% 1Y EPS growth, compared to its 3Y revenue CAGR of -7.7%.
Wall Street consensus is Hold based on 31 analysts, beating EPS expectations in 25% of recent quarters with a -1-quarter streak. The consensus price target represents a -18.6% change from current levels.
Investment risks for BHP Group Limited include: -21.3% 1-year max drawdown, high beta (1.53x market volatility). Volatility risk is characterized by a beta of 1.53x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.