BHP

 BHP

22/7/26

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https://stockanalysis.com/quote/asx/bhp/

https://www.tradingview.com/symbols/ASX-BHP/financials-overview/

https://www.marketindex.com.au/asx/bhp

https://koalagains.com/stocks/ASX/bhp

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ASX BHP

ROE & Earnings

Very uneven earnings 

Follows the commodity cycles

But it does have a very good stability for a mining company because its so large and diversified.

Probably the worlds best miner.

If you must own this make sure you buy it when its PE is in the range of 10 to 12

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ASX:BHP's performance over the last 5 years has been highly profitable but cyclical, driven by fluctuating commodity prices. While the company maintained a rock-solid balance sheet with manageable debt, its Return on Equity (ROE) spiked to record highs in 2022 before cooling off as market conditions normalized. [1, 2, 3, 4, 5]

Financial Snapshot (Based on FY21 to FY25 Full-Year Data)

• Profitability: BHP generated immense profits. The company posted an underlying attributable profit of US$10.2 billion for FY2025 (following a peak of over US$19.4 billion in 2023). For the trailing 12 months, the net income sits around US$10.24 billion. [1, 2, 3, 4, 5]

• Debt: Net debt has remained tightly controlled. While net debt recently moved up to US$12.9 billion, it remains well within the company’s target range of US$10 billion to US$20 billion. [1]

https://stockanalysis.com/quote/asx/bhp/financials/ratios/

Below are the D/E ratios for the last 5 years

2026 - 0.53

2025 - 0.49

2024 - 0.45

2023 - 0.50

2022 - 0.37

• Return on Equity (ROE): BHP's ROE has been heavily cyclical, averaging over 26% over the last five years. It hit a massive 5-year peak of 42.1% in FY2022 due to surging commodity prices, but moderated to approximately 19.5% by FY2025. [1]

• Shareholder Returns: Over the past five years, BHP has distributed over US$50 billion to shareholders in cash dividends, aided by a dividend policy payout ratio of at least 50% of underlying attributable profit

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ROIC Vs WACC

BHP's Return on Invested Capital (ROIC) consistently exceeds its Weighted Average Cost of Capital (WACC), featuring an ROIC around 14% to 18% against a WACC of roughly 7.5% to 8.5%. This positive spread indicates that BHP Group successfully creates economic value through its mining operations. [1, 2, 3, 4]

Return on Invested Capital (ROIC) Trends

Current ROIC: Trailing twelve-month figures sit between 14.08% and 18.21%. [1, 2]
Historical Performance: Over recent multi-year cycles, ROIC peaked above 28% during strong commodity price booms (such as in fiscal 2022) and moderated down to the mid-teens during softer pricing environments. [1, 2]
Averages: The 5-year historical average ROIC remains strong at approximately 29.9% according to capital allocation profiles, heavily skewed by prior commodity upswings. [1, 2]

Cost of Capital (WACC) Dynamics

Current WACC: Estimated between 7.9% and 8.4%.
10-Year Median: Historically hovers around a 7.45% baseline, remaining relatively steady despite macroeconomic interest rate shifts. [1, 2]

Value Creation Spread

Economic Spread: BHP maintains a positive ROIC-to-WACC spread (averaging roughly 20% to 26% higher over peak periods and settling lower during contraction years), confirming that returns comfortably clear the hurdle rate for capital raised. [1]

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