As of May 23, 2025, BHP Group PLC's estimated intrinsic value ranges from $2326.23 to $4091.50 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $3463.65 | +88.6% |
| Discounted Cash Flow (5Y) | $3344.46 | +82.1% |
| Dividend Discount Model (Multi-Stage) | $2326.23 | +26.7% |
| Dividend Discount Model (Stable) | $4065.75 | +121.4% |
| Earnings Power Value | $4091.50 | +122.8% |
Is BHP Group PLC (BHP.L) undervalued or overvalued?
With the current market price at $1836.50, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate BHP Group PLC's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 1.7% | 2.2% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 0.96 | 1.04 |
| Cost of equity | 6.9% | 9.3% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 36.2% | 38.0% |
| Debt/Equity ratio | 0.13 | 0.13 |
| After-tax WACC | 6.4% | 8.6% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $4,359 | $233,636M | 71.8% |
| 10-Year Growth | $4,515 | $241,757M | 53.0% |
| 5-Year EBITDA | $3,604 | $183,478M | 64.1% |
| 10-Year EBITDA | $4,079 | $207,651M | 45.3% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $20,844M |
| Discount Rate (WACC) | 8.6% - 6.4% |
| Enterprise Value | $242,027M - $327,055M |
| Net Debt | $5,737M |
| Equity Value | $236,290M - $321,318M |
| Outstanding Shares | 52M |
| Fair Value | $4,520 - $6,146 |
| Selected Fair Value | $4091.50 |
| Metric | Value |
|---|---|
| Market Capitalization | $93498M |
| Enterprise Value | $93498M |
| Trailing P/E | 0.00 |
| Forward P/E | 7.45 |
| Trailing EV/EBITDA | 5.60 |
| Current Dividend Yield | 886.42% |
| Dividend Growth Rate (5Y) | 28.24% |
| Debt-to-Equity Ratio | 0.13 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $1039.09 |
| Discounted Cash Flow (5Y) | 25% | $836.11 |
| Dividend Discount Model (Multi-Stage) | 20% | $465.25 |
| Dividend Discount Model (Stable) | 15% | $609.86 |
| Earnings Power Value | 10% | $409.15 |
| Weighted Average | 100% | $3359.47 |
Based on our comprehensive valuation analysis, BHP Group PLC's weighted average intrinsic value is $3359.47, which is approximately 82.9% above the current market price of $1836.50.
Key investment considerations:
Given these factors, we believe BHP Group PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.