Is BHP Group Limited (BHP) overvalued?
On Equity Rank's model estimate, BHP trades close to its fair value (1% below it). BHP Group Limited (BHP) last closed at $79.89; the multi-method model fair value is $80.46.
| Price | Model fair value | Price vs model |
|---|---|---|
| $79.89 | $80.46 | 1% below |
What the answer rests on
- 4 of 11 valuation methods put BHP's value above its price and 7 put it below, so the methods disagree.
- To justify today's price, BHP's free cash flow would need to grow about 3.6% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -0.1% a year.
- BHP trades at 20.8 times its last year's earnings, against a median of 12.1 for 36 profitable Mining companies.
- Over the past year the price sat below the model fair value on 28% of trading days. The gap ranged from 3% below to 37% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind BHP's fair value · What prices assume · Other companies