Concerns around weakening Chinese demand, the lackluster nature of the U.S. recovery, and cresting commodity prices, suggest a period of more subdued growth in the basic materials sector. Arguably, the fallout from the global financial crisis has been felt least in the land down under … Australia. The Australian dollar is at 30 day highs, nearly at par with the U.S. dollar. It may follow that good companies to invest in may make Australia their home! One of Australia’s largest companies is BHP Billiton (BHP). This goliath in the basic materials sector employs 100,000 full-time equivalents and boasts a market cap of about $178 billion. It trades at around $67. Today we will compare this giant with similar companies from other parts of the world and see how they match up.
BHP Billiton boasts some fairly impressive fundamentals. The trailing twelve month price to earnings ratio is a value leaning 7.84 and the price to earnings growth ratio is 2.18, by no measure ideal, but not a deal breaker either. Price to book is in the acceptable range, reported at 2.81. BHP Billiton has an enviable return on equity of 38.32% and positive quarterly year-over-year revenue growth of 9.9%. Unfortunately, we can’t say the same for quarterly year-over-year earnings growth which crept into negative territory at -5.5%.
Income statements demonstrate that over the past 5 quarters, net income has been relatively flat, averaging about $9.6 billion. BHP Billiton’s financial strength is impressive for such a capital intensive enterprise.To continue reading, click here.