BHP Group (ASX:BHP) has renewed a five year memorandum of understanding with China Baowu Steel Group to pursue lower emissions steelmaking technologies, including modified blast furnaces and direct reduced iron trials using Pilbara ore.
Recent trading suggests investors are warming to that sustainability story, with a 7 day share price return of 3.11% and a 90 day gain of 6.07%. This is even after a 30 day decline of 7.52% from the A$62.07 level, while a 1 year total shareholder return of 60.61% and a 5 year total shareholder return of 159.08% point to momentum that has been strong over a longer horizon.
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The share price has moved ahead of the average analyst target, yet BHP Group still trades at a steep discount to some intrinsic value estimates. Where does a reasonable view of fair value actually land within that range?
Most Popular Narrative: 30% Overvalued
BHP Group last closed at A$62.07, well above the A$47.93 fair value set out in the most followed narrative, which frames the current price as rich against the recent earnings base.
At A$47.93 per share, BHP Group (ASX: BHP) appears reasonably valued based on its current operating performance. For the six months to 31 December 2025, BHP reported revenue of US$27.9 billion, underlying EBITDA of US$15.5 billion and underlying attributable profit of US$6.2 billion, with an underlying EBITDA margin of 58.4%. Underlying earnings were US$1.222 per share for the half. Annualising this figure and converting it at an AUD/USD exchange rate of 0.6949 implies approximately A$3.52 per share and a price-to-earnings multiple of around 13.6 times. This annualised figure assumes that the conditions experienced during the first half continue and should therefore be treated cautiously for a commodity producer.
See why 9 investors see BHP Group as 30% overvalued.
Result: Fair Value of A$47.93 (OVERVALUED)
Still, BHP Group faces two clear swing factors: realised commodity prices and execution risk on projects like Jansen that could challenge this overvaluation case.
Find out about the key risks to this BHP Group narrative.
Next Steps
If the mix of enthusiasm and caution around BHP Group feels familiar, see it as a prompt to pressure test the numbers yourself and consider acting before sentiment shifts. To see how the current debate translates into concrete risk and reward markers, start with the 1 key reward and 1 important warning sign.
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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.
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