September 28, 2023
Top 10 Stock BHP Hold 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 Zinc Mining and Production
BHP is listed as a top 10 stock on September 28, 2023 in the market index Zinc because of its high performance in at least one of the Obermatt investment strategies. All consolidated Obermatt Ranks are below-average. Based on the Obermatt Method, an investment in the company is not advisable today. Based on the Obermatt 360° View of 26 (26% performer), Obermatt assesses an overall hold recommendation for BHP on September 28, 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° View BHP Hold
| 360 METRICS | September 28, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 34 |
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| GROWTH | ||||||||
| GROWTH | 45 |
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| SAFETY | ||||||||
| SAFETY | 36 |
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| SENTIMENT | ||||||||
| SENTIMENT | 49 |
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| 360° VIEW | ||||||||
| 360° VIEW | 26 |
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ANALYSIS: With an Obermatt 360° View of 26 (better than 26% compared with alternatives), overall professional sentiment and financial characteristics for the stock BHP are below the industry average. The 360° View is based on consolidating four consolidated indicators, with all four indicators below average for BHP. The consolidated Value Rank has a low rank of 34 which means that the share price of BHP is on the higher side compared with typical size in 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. The consolidated Growth Rank also has a low rank of 45, which means that the company exhibits below-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 lower than for 45% of competitors in the same industry. The consolidated Safety Rank has a riskier rank of 36, which means that the company has a riskier financing structure than 64% 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 low rank of 49, which means that professional investors are more pessimistic about the stock than for 51% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 26, BHP is worse than 74% of all alternative stock investment opportunities based on the Obermatt Method. As all consolidated Obermatt Ranks are below-average, this is a risky stock investment proposition, especially since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 49. The negative market view on BHP may stem from the high stock price (low value), the low level of growth, or the risky financing structures. That's several problems with no good news anywhere. Based on the current information, we don’t see any compelling arguments to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not confirmed by investor behavior today. While BHP may have a bright future, it is reflected in neither the financial indicators nor the market sentiment. ...read more
Sentiment Strategy: Professional Market Sentiment for BHP only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 49 (better than 49% compared with alternatives), overall professional sentiment and engagement for the stock BHP is below industry 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 20 (worse than 80% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 72, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in BHP. More encouragingly, the Professional Investors rank is 73, which means that professional investors hold more stock in this company than in 73% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 33, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 67% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 49 (less encouraging than 51% compared with investment alternatives), BHP has a reputation among professional investors that is below that of its competitors. The sentiment signals are mixed for BHP. While analysts and the news channels are negative, there is a change in what analysts think. Above-average institutional investors in this company support them. Sentiment signals remain mixed with analysts and news channels pessimistic, though improving, and professional investors above average. ...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 90% 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 12 which means that the stock price compared with what market professionals expect for future profits is higher than 88% 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 48 which means that the stock price compared with what market professionals expect for future profit levels is higher than 52% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a 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 low
| GROWTH METRICS | September 28, 2023 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 42 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 41 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 51 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 57 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 45 |
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ANALYSIS: With an Obermatt Growth Rank of 45 (better than 45% compared with alternatives), BHP shows a below-average growth dynamic in its industry. There is limited momentum in this company. 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 51, which means that currently professionals expect the company to grow its invested capital more than 41% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 57 (above 57% of alternative investments). But Sales Growth has only a rank of 42, which means that, currently, professionals expect the company to grow less than 58% of its competitors, and Profit Growth is also low at a rank of 41. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 45, is a hold 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 below-average
| SAFETY METRICS | September 28, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 38 |
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| REFINANCING | ||||||||
| REFINANCING | 13 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 73 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 36 |
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ANALYSIS: With an Obermatt Safety Rank of 36 (better than 36% compared with alternatives), the company BHP has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of BHP is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, 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 73, meaning the company generates more profit to service its debt than 73% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 13, 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 87% of its competitors. Leverage is also high at a rank of 38, which means that the company has an above-average debt-to-equity ratio. It has more debt than 62% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 36 (worse than 64% compared with alternatives), BHP has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually 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 Below-Average Financial Performance
| COMBINED PERFORMANCE | September 28, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 34 |
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| GROWTH | ||||||||
| GROWTH | 45 |
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| SAFETY | ||||||||
| SAFETY | 73 |
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| COMBINED | ||||||||
| COMBINED | 29 |
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ANALYSIS: With an Obermatt Combined Rank of 29 (worse than 71% compared with investment alternatives), BHP (Diversified Metals & Mining, Australia) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of BHP are low in value (priced high) with a consolidated Value Rank of 34 (worse than 66% of alternatives), show below-average growth (Growth Rank of 45), and are riskily financed (Safety Rank of 36), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 29, is a hold recommendation based on BHP's financial characteristics. As the company BHP's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 34), low growth (Obermatt Growth Rank of 45), and risky financing practices (Obermatt Safety Rank of 36), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more
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