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• Wondering if BHP Group at around A$55.43 is offering fair value or if the current price is leaving money on the table.
• The stock has been relatively steady over the last week with a 0.1% decline, while the 30 day return of 10.0% and 1 year return of 51.2% put recent moves into perspective.
• Recent coverage has focused on BHP Group’s position among global resource majors, its exposure to key commodities, and how investors are weighing those factors against broader market sentiment. This context helps explain why returns over 3 and 5 years, at 46.5% and 81.8%, are front of mind for many shareholders looking at the stock today.
• Right now, BHP Group scores a 2 out of 6 valuation checks. The rest of this article will walk through what that means across different valuation methods and will also outline a broader way to think about value by the end.

BHP Group scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: BHP Group Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and discounting them back to today using a required rate of return. It focuses on the cash that could be available to shareholders rather than accounting earnings.

For BHP Group, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is around $10.33b. Analysts provide explicit free cash flow estimates out to 2030, for example $11.36b in 2030. Simply Wall St then extrapolates further years based on those inputs. Each of these projected cash flows is discounted back to today’s value using the chosen discount rate, then summed to arrive at an intrinsic value per share.

On this basis, the DCF model arrives at an estimated fair value of about $39.93 per share. Compared with the current share price of around A$55.43, this implies the stock is about 38.8% above the DCF estimate, which points to a rich valuation on this cash flow view.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests BHP Group may be overvalued by 38.8%. Discover 9 high quality undervalued stocks or create your own screener to find better value opportunities.

BHP Discounted Cash Flow as at Apr 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for BHP Group.

Approach 2: BHP Group Price vs Earnings

For profitable companies like BHP Group, the P/E ratio is a widely used yardstick because it links what you pay per share to the earnings that business is currently generating. It gives you a quick sense of how many years of current earnings the market is willing to pay for.

What counts as a “normal” P/E often reflects what investors expect from a company and how much risk they see. Higher expected earnings growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk tends to be associated with a lower P/E.

BHP Group currently trades on a P/E of about 19.7x. That is above the Metals and Mining industry average of around 13.1x, and below the broader peer group average of about 29.5x. Simply Wall St’s Fair Ratio for BHP Group is 21.6x, which is its proprietary estimate of an appropriate P/E based on factors such as earnings growth, industry, profit margin, market cap and company specific risks.

Because the Fair Ratio blends these fundamentals, it can be more tailored than a simple comparison with peers or the industry, which may have very different profiles. With the current P/E of 19.7x below the Fair Ratio of 21.6x, the shares screen as undervalued on this earnings multiple view.

Result: UNDERVALUED

ASX:BHP P/E Ratio as at Apr 2026

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Upgrade Your Decision Making: Choose your BHP Group Narrative

Earlier it was mentioned that there is an even better way to think about valuation. Narratives on Simply Wall St’s Community page let you attach a clear story about BHP Group to concrete numbers by linking your view of its business, a forecast for revenue, earnings and margins, and a Fair Value that you can then compare with the current price to decide whether to act. The platform updates those Narratives automatically as new news or results arrive, and different investors can express very different views. For example, one Narrative may see Fair Value near A$31.79 with a modest 1.4% revenue growth rate, and another may see Fair Value around A$121.48 with revenue growth assumptions of 28.0%. All of this is presented within an easy to use framework that combines story and numbers.

For BHP Group however we will make it really easy for you with previews of two leading BHP Group Narratives:

Each one ties a clear story about the business to a Fair Value, growth outlook, and risk set, so you can quickly see which version of the future lines up better with your own view.

🐂 BHP Group Bull Case

Fair Value: A$55.50

Implied undervaluation vs last close: 0.1%

Revenue growth assumption: 14.17%

• Emphasises copper and potash as key future facing commodities, with exposure to AI data centers, electrification, and long life growth options in regions like the Vicuña district.
• Highlights Jansen potash as a new, large scale revenue stream that is less tied to Chinese industrial demand, alongside ongoing focus on low cost operations and capital efficiency.
• Sets out long term opportunities and risks around decarbonization, new mining technologies, and structural shifts such as the circular economy, as well as regulatory and project execution challenges.

🐻 BHP Group Bear Case

Fair Value: A$52.50

Implied overvaluation vs last close: 5.6%

Revenue growth assumption: 1.07%

• Frames BHP as heavily exposed to iron ore and Chinese steel demand, with earnings and cash flow sensitivity to any sustained slowdown or stronger competition.
• Focuses on risks around project execution, inflation, regulatory complexity, and ESG requirements, which could affect margins, capex needs, and long term profitability.
• Anchors Fair Value to analyst assumptions for moderate revenue growth, higher future profit margins, and a P/E multiple around 18x, with the current price sitting modestly above the consensus target.

If you want to see how your own expectations for BHP Group stack up against these stories, the Community page lets you compare different Narratives side by side and stress test the assumptions that matter most to you. See what the community is saying about BHP Group.

Do you think there’s more to the story for BHP Group? Head over to our Community to see what others are saying!

ASX:BHP 1-Year Stock Price Chart

This article by Simply Wall St is general in nature. We provide commentary based on historical data
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
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include BHP.AX.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com