Markets
RIO

BHP Billiton (BHP) Poised to Grow on Robust Growth Drivers

An image of a stock chart displayed on a tablet
Credit: Shutterstock photo

On Oct 18, we issued an updated research report on premium basic materials company BHP Billiton LimitedBHP .

The degree of business rivalry is high in the global mining market and dominated by large companies like Vale S.A. VALE , Rio Tinto plc RIO and South32 Limited SOUHY . Notably, we notice that competitive pressure in the industry has been mounting due to limited number of new entrants (on account of huge start-up costs involved in such businesses).

However, amid such adverse conditions, BHP Billiton has been steadily boosting its competency on the back of improved mining yield. In the first-quarter fiscal 2018 production results (released Oct 18, 2017), the company's aggregate copper productivity improved 14% year over year, on the back of sturdy productivity of Escondida, Olympic Dam and Antamina copper mines. Notably, the company also reaffirmed its iron-core productivity within the range of 239-243 Mt (estimating a year-over-year upside of 3-5%) for fiscal 2018.

BHP Billiton intends to drive its near-term operational performance on the back of increased safety measures, greater capital discipline and higher productivity.

The company also finances numerous growth projects and boosts shareholders' returns on the back of elevated free cash-flow generation. The company has been steadily enhancing its liquidity on the back of more efficient operations and increasing productivity gains.

Over the past five years, BHP Billiton accumulated productivity gains worth $12 billion. Notably, another $2-billion gain is estimated to be realized by the end of fiscal 2019.

We also notice that the company is reducing capital and exploration expenses by exercising flexibility of Onshore plans in the United States and focusing on more capital efficient projects. For instance, in fiscal 2017, exploration and capital expenses plunged 32% year over year to $5.2 billion.

In addition, BHP Billiton reported robust earnings before interest, tax, depreciation and amortization (EBITDA) margin and earnings in fiscal 2017. The company noted that the improvement was primarily driven by escalating prices of major core metals and operating cash-cost improvements. Continuation of this upbeat trend will likely bolster the bottom-line performance of BHP Billiton in the upcoming quarters.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

VALE S.A. (VALE): Free Stock Analysis Report

BHP Billiton Limited (BHP): Free Stock Analysis Report

Rio Tinto PLC (RIO): Free Stock Analysis Report

South32 Ltd. (SOUHY): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

RIO VALE SOUHY BHP

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More