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Is Now the Time to Buy BHP Billiton?

Rupert Hargreaves
November 27, 2012

LONDON -- I'm always searching for shares that can help ordinary investors like you make money from the stock market.

So right now I am trawling through the FTSE 100 (UKX) and giving my verdict on every member of the blue-chip index. Simply put, I'm hoping to pinpoint the very best buying opportunities in today's uncertain market.

Today I am looking at BHP Billiton  (LSE: BLT.L  ) (NYSE: BBL  ) to determine whether you should consider buying the shares at 1,950 pence.

I am assessing each company on several ratios:

  • Price/Earnings (P/E): Does the share look like a good value when compared against its competitors?
  • Price Earnings Growth (PEG): Does the share look like a good value factoring in predicted growth?
  • Yield: Does the share provide a solid income for investors?
  • Dividend Cover: Is the dividend sustainable?

So let's look at the numbers:



3-year EPS growth

Projected P/E



3-year dividend growth

Dividend cover

BHP Billiton 1,950p 36% 11.5 N/A 3.6% 29% 2.9

The consensus analyst estimate for next year's earnings per share is $2.69 (20 % fall) and dividend per share is $1.23 (3% growth).

Trading on a projected P/E of 11.5, BHP appears to be more expensive than its peers in the mining sector, who are currently trading on an average P/E