Here's why the BHP (ASX:BHP) share price is closing in on its record high

The BHP Group Ltd (ASX:BHP) share price is closing in on its record high following the release of its half year results this morning…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The BHP Group Ltd (ASX: BHP) share price was a positive performer on Tuesday.

The mining giant's shares rose almost 3% to close the day at $47.00.

This leaves the BHP share price trading within touching distance of its record high of $47.54.

Why did the BHP share price push higher today?

Investors were buying BHP shares on Tuesday following the release of a solid half year result. For a deeper dive into its result, you can read about it here.

For the six months ended 31 December, the mining giant posted a 15% increase in revenue to US$25.64 billion and a 21% jump in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to US$14.7 billion. The latter was driven by a 3-percentage point expansion in its operating margin to 59%.

The Big Australian also reported strong growth in its free cash flow and its dividend.

BHP's free cash flow increased 39% over the prior corresponding period to US$5.2 billion. This allowed the BHP board to increase its interim dividend by 55% to a fully franked US$1.01 per share (~A$1.30 per share).

How does this compare to expectations?

According to a note out of Goldman Sachs, BHP's underlying EBITDA was 1% ahead of its forecast.

It notes that this was driven by EBITDA beats from oil and copper, which offset softer than expected iron ore and coal earnings.

Also coming in ahead of its expectations was BHP's dividend. The broker was only expecting an 82 U.S. cents per share interim dividend, compared to its actual interim dividend of US$1.01 per share.

Another positive was its lower than expected net debt. Goldman notes that BHP's net debt was US$11.8 billion at the end of December. This compares to the broker's estimate of US$12.8 billion.

Is the BHP share price in the buy zone?

Goldman Sachs still sees a little bit of upside left in the BHP share price. It currently has a buy rating and $47.80 price target.

Though, this price target could change in the coming days once the broker has had time to fully digest the result. Stay tuned for that.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

A neon sign says 'Top Ten'.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors regained some confidence on the stock market today.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Baby Bunting, Bellevue Gold, Cettire, and New Hope shares are rising today

These ASX shares are having a good session. But why are investors buying their shares?

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
Share Gainers

Here are the top 10 ASX 200 shares today

It was a shaky, but positive start to the trading week for ASX shares today.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why Bannerman Energy, Cettire, TechnologyOne, and Zip shares are charging higher

These ASX shares are having a great start to the week. But why?

Read more »

A happy girl in a yellow playsuit with a zip gives the thumbs up
Share Gainers

If I'd put $5,000 into Zip shares on 9 October, here's what I'd have now!

The stars have been aligning for Zip shares.

Read more »

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

It was an awful end to the trading week for ASX investors this Friday.

Read more »

A beautiful woman holds up one finger with one hand and has her hand on her waist with the other as she smiles widely as though she is very pleased about something.
Share Gainers

Why Beach, Clinuvel, Deep Yellow, and EML shares are charging higher today

These ASX shares are ending the week strongly. But why?

Read more »

Man smiling at a laptop because of a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a fairly miserable day on the share market this Thursday.

Read more »