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BHP Billiton Ltd (NYSE:BHP)
Intrinsic Value: Projected FCF
$40.14 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, BHP Billiton Ltd's projected FCF intrinsic value is $40.14. The stock price of BHP Billiton Ltd is $36.69. Therefore, BHP Billiton Ltd's Price to Intrinsic Value: Projected FCF Ratio of today is 0.9.

BHP' s 10-Year Price to Intrinsic Value: Projected FCF Range
Min: 0.98   Max: 160.54
Current: 0.91

0.98
160.54

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of BHP Billiton Ltd was 160.54. The lowest was 0.98. And the median was 1.71.

BHP's Price to Intrinsic Value: Projected FCF is ranked higher than
60% of the 339 Companies
in the Global Industrial Metals & Minerals industry.

( Industry Median: 1.15 vs. BHP: 0.91 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here BHP Billiton Ltd's FCF(6 year avg) is calculate as

BHP Billiton Ltd Annual Data

200906201006201106201206201306201406
total_freecashflow 7,9877,17918,4634,929-4,0258,885

Add all the adjusted EPS together and divide 6 will get BHP Billiton Ltd's FCF(6 year avg) = $7,236.33.

BHP Billiton Ltd's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Jun14)*0.8)/Shares Outstanding
=(12.5226157651*7236.33333333+79143*0.8)/2669.000
=57.67

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

BHP Billiton Ltd's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=36.69/57.6741183521
=0.64

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

BHP Billiton Ltd Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
Projected FCF 10.8618.3928.6542.3442.6149.9967.1963.0647.4753.87

BHP Billiton Ltd Semi-Annual Data

Jun10Dec10Jun11Dec11Jun12Dec12Jun13Dec13Jun14Dec14
Projected FCF 49.990.0067.190.0063.060.0047.470.0053.870.00
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