BHP share price in focus
BHP Group, formerly known as BHP Billiton, is a diversified natural resources company founded in 1885. It produces a wide range of commodities used in energy production and manufacturing, and is expanding into fertilisers.
BHP’s primary business revolves around mineral exploration and production, with its assets and operations divided into three key focus areas: copper and related minerals (such as gold, uranium, silver, and zinc), iron ore, and coal (both metallurgical and energy).
BHP is widely regarded as a stable, dividend-paying investment and is a common component of ASX share portfolios. If you invest in a popular ETF, LIC, or through an Industry Super fund, chances are you already have some exposure to BHP shares.
DOW shares
Downer is the leading provider of integrated infrastructure services across Australia and New Zealand, specialising in the construction, maintenance, and operation of transit systems, utility services, and public infrastructure.
While the name might not instantly recognisable, their work is highly visible. For instance, Downer operates Melbourne’s Yarra Trams and manufactures the passenger trains you see in most states.
The company’s operations are divided into three primary segments: Transport, Utilities, and Facilities. The Transport division accounts for just over 50% of Downer’s revenue, with Utilities and Facilities contributing approximately 20% and 30% respectively.
BHP share price valuation
We would consider BHP to be a ‘mature’ or ‘blue-chip’ business, so some of the metrics that could be worth considering include the debt/equity ratio, average yield, and return on equity, or ROE. These measures give us a sense of the company’s debt levels, their ability to generate returns from their assets, and their ability to consistently return profits to shareholders.
For FY24, BHP Group Ltd reported a debt/equity ratio of 45.3%, meaning the company has more equity than debt.
Over the last 5 years, BHP has delivered an average dividend yield of 6.9% per year. This is important to note if you’re looking for income from your investments.
Finally, in FY24, BHP reported an ROE of 19.7%. For a mature business you generally want to see an ROE of more than 10%, so BHP clears this hurdle.
In FY24, Downer EDI Ltd reported a debt/equity ratio of 81.1%, meaning the company has more equity than debt.
As for dividends, since 2019 DOW has achieved an average dividend yield of 3.7% per year, and in FY24 reported an ROE of 3.6%
It’s important to keep in mind that these are only a small selection of metrics and don’t give us enough information to value the business or make an investment decision. To learn more about valuation, check out one of our free online investing courses.
