The Fundamentals of BHP Billiton

  • Posted by
  • on June 22nd, 2011

The 150 year old miner has a diverse portfolio of global proportions.

BHP - Australian for mining.


We started a position last week in BHP Billiton ($BHP) at $88 per share. Watching them closely over the last year or so, we’ve been very impressed with their overall fundies. Growth rates have been steady for BHP (and the metals and minerals industry in general) over the last few years as emerging and growing economies like China and India remain hungry for basic materials.

BHP Billiton is more than just a miner though. They are a worldwide discoverer and producer of natural resources, with operations on six continents. While busy digging for everything from aluminum to uranium to diamonds, BHP also has its hands in the oil and gas industry. As a matter of fact, they were first to bring new deepwater production to the Gulf of Mexico since the moratium was enacted last year after the BP Leak.

Ranked #26 this month in the BeanScreen, here are some recent fundy highlights that finally got us into BHP:

  • Sales growth +39% Y/Y  (5 year annualized +15%)
  • Net income +72% Y/Y  (5 year annualized +15%)
  • Gross margins = 40%  (5 year avg = 76%)
  • Net margins = 28%  (5 year avg = 24%)
  • P/E = 14.8  (forward P/E = 11.2)
  • Price/cash flow = 9.9
  • Debt/equity = 0.28
  • Cash = $16.6 billion
  • Dividend yield = 2.1%

That divy yield is a little weaker than what we look for in a value play, but not too bad considering the run-up the stock has had over the last couple years (see below). BHP is known for hiking their rate, rewarding investors with an annualized increase of about 25% over the last five years.


2 year chart (Y! Finance)


For those interested in having a foot in the commodity door without being narrowly exposed to one particular resource such as precious metals with $BVN or just coal with $ARLP, BHP is worth a strong look. With a wide ranging portfolio spread across the globe, they can better withstand the fluctuations of supply and demand throughout the various commodities markets.


sources: Yahoo! Finance – BHP

BHP Billiton

disclosure: we currently own shares in BHP, BVN and ARLP


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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