May 25, 2023
Top 10 Stock BHP Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: BHP – Top 10 Stock in Copper Mining and Production
BHP is listed as a top 10 stock on May 25, 2023 in the market index Copper because of its high performance in at least one of the Obermatt investment strategies. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° View of 50 (high 50% performer), Obermatt assesses an overall buy recommendation for BHP on May 25, 2023.
Snapshot: Obermatt Ranks
| Country | Australia |
| Industry | Diversified Metals & Mining |
| Index | ASX 100, ASX 200, ASX 300, ASX 50, FTSE All Shares, FTSE 100, FTSE 350, Low Emissions, Copper, Electromobility, Human Rights, Iron, Zinc, Silver, Uranium, Water Efficiency |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° Assessment BHP Buy
| 360 METRICS | May 25, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 34 |
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| GROWTH | ||||||||
| GROWTH | 61 |
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| SAFETY | ||||||||
| SAFETY | 55 |
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| SENTIMENT | ||||||||
| SENTIMENT | 59 |
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| 360° VIEW | ||||||||
| 360° VIEW | 50 |
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ANALYSIS: With an Obermatt 360° View of 50 (better than 50% compared with alternatives), overall professional sentiment and engagement for the stock BHP are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for BHP. The consolidated Growth Rank has a good rank of 61, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. This means that growth is higher than for 61% of competitors in the same industry. The consolidated Safety Rank at 55 means that the company has a financing structure that is safer than 55 comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 59, which means that professional investors are more optimistic about the stock than for 59% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 34, meaning that the share price of BHP is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 66% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a 360° View of 50, BHP is better than 50% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 61), a safe financing structure (Safety Rank of 55), and positive professional market sentiment (Sentiment Rank of 59), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of BHP compared with alternatives? You can use the following rule of dumb: The growth rank reflects where the growth momentum of the company is (61% better than peers). The value rank could be the reverse reflection of that (39%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just extrapolates the past, but sometimes they are right. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for BHP positive
ANALYSIS: With an Obermatt Sentiment Rank of 59 (better than 59% compared with alternatives), overall professional sentiment and engagement for the stock BHP is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for BHP. Analyst Opinions are at a rank of 40 (worse than 60% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 24, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 75, which means that professional investors hold more stock in this company than in 75% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 72, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 72% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to BHP and the professional news channels are on the positive side. ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 59 (more positive than 59% compared with investment alternatives), BHP has a reputation among professional investors that is above-average compared with that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: BHP Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 34 (worse than 66% compared with alternatives), BHP shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for BHP. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 89% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 19 which means that the stock price compared with what market professionals expect for future profits is higher than 81% of comparable companies, indicating a low value concerning BHP's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 42 which means that the stock price compared with what market professionals expect for future profit levels is higher than 58% of comparable companies. In addition, Price-to-Book Capital (also referred to as market-to-book ratio) with an Price-to-Book Rank of 5 is also low. Compared with invested capital, the stock price is higher than for 95% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 34, is a HOLD recommendation based on BHP's stock price compared with the company's operational size and dividend yields. Should dividend investors pick BHP? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose BHP only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: BHP Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 61 (better than 61% compared with alternatives), BHP shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for BHP. Capital Growth has a rank of 82, which means that currently professionals expect the company to grow its invested capital more than 31% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 65 (above 65% of alternative investments). But Sales Growth has only a rank of 35, which means that, currently, professionals expect the company to grow less than 65% of its competitors, and Profit Growth is also low at a rank of 31. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 61, is a BUY recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for BHP, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: BHP Debt Financing Safety above-average
| SAFETY METRICS | May 25, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 47 |
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| REFINANCING | ||||||||
| REFINANCING | 15 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 91 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 55 |
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ANALYSIS: With an Obermatt Safety Rank of 55 (better than 55% compared with alternatives), the company BHP has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of BHP is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for BHP. Liquidity is at 91, meaning the company generates more profit to service its debt than 91% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 15, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 85% of its competitors. Leverage is also high at a rank of 47, which means that the company has an above-average debt-to-equity ratio. It has more debt than 53% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 55 (better than 55% compared with alternatives), BHP has a financing structure that is safer than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usuallyl indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: BHP Above-Average Financial Performance
| COMBINED PERFORMANCE | May 25, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 34 |
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| GROWTH | ||||||||
| GROWTH | 61 |
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| SAFETY | ||||||||
| SAFETY | 91 |
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| COMBINED | ||||||||
| COMBINED | 51 |
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ANALYSIS: With an Obermatt Combined Rank of 51 (better than 51% compared with investment alternatives), BHP (Diversified Metals & Mining, Australia) shares have above-average financial characteristics compared with similar stocks. Shares of BHP are low in value (priced high) with a consolidated Obermatt Value Rank of 34 (worse than 66% of alternatives). But they show above-average growth (Growth Rank of 61) and are safely financed (Safety Rank of 55, which means below-average debt burdens). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 51, is a buy recommendation based on BHP's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company BHP exhibits low value (Obermatt Value Rank of 34), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 61). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 55) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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