A Look At BHP Group’s Valuation As Record Output Meets Higher Jansen Potash Investment

Simply Wall St.

Jan 22

BHP Group (ASX:BHP) has paired record copper and iron ore production with an updated 2026 copper guidance range, while also lifting the investment estimate for its Jansen Stage 1 potash project to US$...

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See our latest analysis for BHP Group. At a share price of A$48.48, BHP Group’s recent operational and guidance updates, including record iron ore and copper output, higher copper guidance and the Jansen cost review, have come alongside a 30 day share price return of 7.57%, a 90 day share price return of 12.72% and a 1 year total shareholder return of 27.06%. This suggests momentum has been building over both the short and longer term despite increased capex on growth projects. If this type of large scale resources story has your attention, it can be useful to compare it with other capital intensive businesses by screening for fast growing stocks with high insider ownership. With record output, higher copper guidance, a Jansen budget now at US$8.4b and the share price only about 1% below consensus targets, you have to ask: is there still a buying opportunity here, or is future growth already priced in? AdvertisementPrice-to-Earnings of 18.4x: Is it justified? On an A$48.48 share price, BHP Group is trading on a P/E of 18.4x, which sits below both its peer group and the broader Australian market. The P/E multiple compares the company’s market value to its earnings, so for a miner like BHP it effectively reflects what investors are currently paying for each dollar of profit. Here, the 18.4x P/E is described as good value relative to peers on two fronts: it is below the Australian market average P/E of 21.8x, and also below the Australian Metals and Mining industry average of 25.9x. On top of that, the current P/E is well under an estimated fair P/E of 31.3x, a level the market could move toward if earnings trends and sentiment remain supportive. Explore the SWS fair ratio for BHP Group Result: Price-to-Earnings of 18.4x (UNDERVALUED) However, there are still pressure points, including execution risk around the US$8.4b Jansen build and any setbacks in key copper and iron ore operations. Find out about the key risks to this BHP Group narrative. Another View: Our DCF Model Flags Caution While the 18.4x P/E suggests BHP Group looks inexpensive against both the market and its peers, our DCF model paints a different picture. On that approach, the estimated future cash flow value is A$41.09 per share, compared with the current A$48.48 price, which implies the stock is trading at a premium to that cash flow based view. For you as an investor, the question is simple: do you trust the earnings based signal or the cash flow signal more? Look into how the SWS DCF model arrives at its fair value. BHP Discounted Cash Flow as at Jan 2026Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out BHP Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 881 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.  Build Your Own BHP Group Narrative If you see the data differently or prefer to work through the numbers yourself, you can build and share a custom thesis in minutes with Do it your way. A great starting point for your BHP Group research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision. Ready for more investment ideas? If BHP has sharpened your interest, do not stop here. Use the Simply Wall St Screener to quickly surface fresh ideas that fit the way you like to invest.  Target potential mispricing by scanning these 881 undervalued stocks based on cash flows that currently look cheap relative to their underlying cash flows and fundamentals. Ride powerful tech shifts by zeroing in on these 23 AI penny stocks that are tied to artificial intelligence themes across different parts of the market. Boost your income focus by filtering for these 13 dividend stocks with yields > 3% that may offer higher yields while still meeting your quality criteria.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.Valuation is complex, but we're here to simplify it.Discover if BHP Group might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"dataReport","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"}}}