BHP Group Ltd (ASX: BHP) shares are a popular option for Aussie investors.
Unfortunately, though, they haven't been the best investment over the past 12 months.
During this time, the mining giant's shares have lost 16% of their value.
As a comparison, the S&P/ASX 200 index is up 9.6% over the same period. This means a relative underperformance of over 25%.
The big question now is whether this makes BHP shares a bit of a bargain? Is that the case? Let's find out.
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Are BHP shares a bargain buy?
The good news is that the broker community is overwhelmingly positive on the Big Australian and sees plenty of value on offer with its shares.
In fact, the least bullish major broker is UBS with a neutral rating and $40.00 price target. Based on its current share price of $35.64, this implies potential upside of 12% over the next 12 months.
Elsewhere, the teams at Morgans and Ord Minnett both have accumulate ratings and $43.70 and $41.00 price targets, respectively. These price targets suggest that upside of 15% to 23% is possible from current levels.
The latter has been pleased with the performance of its massive Escondida copper operation in FY 2025. It recently said:
Escondida won on all key fronts – an increased amount of ore mined, improved ore grades and greater mill throughput – in the quarter. A review of the project's performance also led BHP to upgrade its medium-term production outlook for the project.
Who else is bullish?
Elsewhere, the team at Citi is bullish and has a buy rating and $43.00 price target, which represents 21% upside for investors.
Another bullish broker is Macquarie Group Ltd (ASX: MQG). It has an outperform rating and $42.00 price target on the mining giant's shares. This implies potential upside of 18% for investors between now and this time next year.
It has also been impressed by the performance of the Escondida operation. It said:
Outperform. With the Escondida improved outlook, we note BHP is actively looking to improve FCF outcomes over the medium term horizon. Pricing in US$72/t iron ore (all other prices at spot), we see value here noting its asset quality; we prefer BHP over RIO.
Another positive is that Macquarie expects some good dividend yields from the Big Australian in the near term. It has pencilled in fully franked dividends per share of 96 US cents in FY 2025 and then 107 US cents in FY 2026. This equates to dividend yields of 4.2% and 4.7%, respectively.
If we add these dividends into the equation, a total potential return of over 22% is possible based on Macquarie's recommendation.
Overall, these analysts appear to believe that BHP shares are cheap and that investors should be snapping them up while they are down.
