BHP (ASX:BHP) earnings release. How does it compare to expectations?

It’s possible that some developments are influencing the company’s shares even more than its earnings numbers today.

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The BHP Group Ltd (ASX: BHP) share price is having a shocker today. BHP shares are currently down a nasty 6.88% to $47.80 a share at the time of writing. This move follows the ‘Big Australian’ releasing its full-year earnings results yesterday evening after market close.

Of course, BHP investors aren’t used to this kind of share price move in recent times. BHP has been one of the top-performing ASX 200 blue chips over the past year or two. It was only earlier this month that BHP shares were hitting new all-time highs, topping out at $54.55 a share around a fortnight ago.

Even after today’s slump, the BHP share price is still up 12.66% in 2021 so far. As well as 20.55% over the past 12 months.

So what went so wrong for BHP?

Well, clearly investors have been disappointed with the earnings BHP reported yesterday. So let’s go through what was expected against what the company actually delivered.

According to CommSec, investment bank Goldman Sachs was expecting BHP to deliver underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$37.2 billion for FY21. BHP managed to beat this, reporting EBITDA of US$37.4 billion.

However, in terms of net profits after tax (NPAT), the company slightly undershot Goldman’s expectations. It reported US$17.1 billion of EBITDA against the expected US$17.2 billion.

But in good news for income investors, BHP beat on its dividend expectations. Goldman was expecting the company to announce a final dividend of US$1.88 per share. But instead, BHP came out with a final dividend of US$2 per share. That represents an earnings payout ratio of 89% for FY21.

So why is the BHP share price falling today?

So revenues, earnings and dividends all came in pretty close to their predicted levels (with a dividend beat to boot). As such, investors might be wondering why BHP shares are falling so heavily today.

Well, as my Fool colleague James discussed earlier this morning, it might be a reaction to the other news BHP announced in this earnings report. Perhaps the most consequential is the proposed splintering of BHP’s petroleum business, which is set to be merged with Woodside Petroleum Limited (ASX: WPL).

It also announced that its 20-year run of having BHP shares dual-listed on the London Stock Exchange would end.

It’s possible that these two developments might be influencing the company’s shares even more than its earnings numbers today.

At the current BHP share price, the miner has a market capitalisation of $151.21 billion, a price-to-earnings (P/E) ratio of 25.82, and a trailing dividend yield of 4.29%.

Should you invest $1,000 in BHP right now?

Before you consider BHP, you'll want to hear this.

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*Returns as of January 13th 2022

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

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