What do brokers think of the BHP Group Ltd (ASX: BHP) share price? Could the big Australian resource giant be a buy right now?
Source:BHP
Was the recent report strong?
BHP's underlying numbers included double digit growth for many statistics.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 21% to US$14.7 billion and underlying attributable profit went up 16% to US$6 billion.
Profit from operations grew by 17% to US$9.75 billion and net operating cash flow increased by 26% to US$9.37 billion.
However, attributable profit fell 20% to US$3.9 billion. This included an exceptional, one-off loss of US$2.2 billion predominately relating to the impairments of New South Wales Energy Coal (NSWEC) and associated deferred tax assets, as well as Cerrejon.
Free cash flow of US$5.2 billion reflected higher iron ore and copper prices, along with strong operational performance. This cashflow helped net debt improve by 7% to US$11.8 billion.
The interim dividend was increased by 55% to US$1.01.
BHP CEO Mike Henry provided some commentary about this result, he said:
We further grew value in the business during the half through achieving first production at the Spence Growth Option and through the acquisition of an additional interest in Shenzi. Our other major projects in iron ore, petroleum and potash are progressing to schedule.
Creating and securing more options in future facing commodities remains a priority. In nickel and copper, we have established further partnerships, acquired new tenements and progressed exploration.
What has the BHP share price done recently?
BHP shares have risen alongside the strength of the commodity market, particularly iron ore, over the last year.
Over the last six months the BHP share price has gone up by around 27%. However, it has actually dropped by 7% since 3 March 2021.
What do brokers think of the BHP share price?
Brokers are a bit mixed about the big resources company. For example, Morgans has a share price target of $42.20 for the company, whereas Macquarie Group Ltd (ASX: MQG) has a price target of $55.
Macquarie thinks that BHP's exposure to copper – which is a beneficiary of green initiatives and renewable energy – will help earnings in the medium-term.
Using Morgans' numbers, the BHP share price is trading at around 12x FY21's estimated earnings.
Outlook
Mr Henry spoke of the company's outlook:
Our outlook for global economic growth and commodity demand remains positive, with policymakers in key economies signalling a durable commitment to growth and signalling ambitions to tackle climate change. These factors, combined with population growth and rising living standards, are expected to drive continuing growth in demand for energy, metals and fertilisers.
Our leadership team is in place and accelerating our agenda to be a safer, lower cost and more productive. We are well positioned, with a portfolio essential products that will support a cleaner and more prosperous world while generating sustainable returns for our shareholders and value for our communities.
BHP also said that the rollout of vaccines in key economies removes a material amount of downside risk to the short-term demand and price outlook for its portfolio of commodities.
