Risk and Return Analysis of FMG and OZL

This report analyzes the risk and return of Fortescue Metals Group (FMG) and OZ Minerals (OZL) stocks. It compares their financial performance using various metrics such as dividend per share, ROE, market value of equity to book ratio, intrinsic value per share, and sustainable growth rate. The report also calculates the average yearly returns and yearly returns for both stocks over a period of five years. The analysis concludes that FMG is a good prospect for investment due to its better returns, minimal subsequent risk, and satisfactory growth.

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Risk and Return
N8-FINA2006


 Introduction
 Basis of Judgement case 2
 Judgement
 Calculation of risk and return
 Analysis
Table of Contents


 Comparison of FMG and OZL
 Various tools and techniques
 Calculation of risk and return of Stock and
Market prices
 Sustainability of the Stock in comparison to
Market
Introduction

 Dividend per share
 ROE
 Market Value of equity to Book ratio
 Intrinsic value per share
 Sustainable growth of return
Basis of Judgement


Particulars FMG OZL
Market value of
equity to book value
1.67 1.09
ROE 0.22 0.09
Dividend per share 0.24 0.14
Sustainable growth
rate
13.75% 7.51%
Intrinsic Value 0.97 0.02
Contd…


 FMG is a good prospect
 Better returns to the shareholders
 Increase in the value of Equity
 Satisfactory growth opportunities
 Effective return on equity
Judgement


Particulars FMG Stock (AXJO)
Average Yearly
Returns
0.01768 0.03220
Yearly Returns Year
2014
0.3511 0.0858
Year 2015 -0.6384 0.0816
Year 2016 0.3125 -0.1320
Year 2017 1.4563 0.1508
Year 2018 -0. 3069 -0.0012
Calculation of returns


 Satisfactory Year returns
 Yearly returns are similar and even better in some
years
 The position is satisfactory
 The systematic risk is within the range
Analysis


 FMG is a good prospect for investment
 Better and effective returns
 Minimal Subsequent risk
 Value to the shareholders
 Satisfactory growth
Conclusion


 ASX, 2018. Charting. ASX. [Online]. Also available at
https://www.asx.com.au/prices/charting/index.html?
code=XKO&compareCode=&chartType=line&priceM
ovingAverage1=&priceMovingAverage2=&volumeIn
dicator=Bar&volumeMovingAverage=&timeframe=.
[Accessed on 03-05-2018]
 Reuters, 2018. Fortescue Metals Group Ltd
(FMG.AX). Reuters. [Online]. Also available at
https://www.reuters.com/finance/stocks/chart/FMG.A
X [Accessed on 03-05-2018]
References