Financial Analysis of Bluescope Steel Ltd and Onesteel Ltd Australia Research Paper

Financial Analysis of Bluescope Steel Ltd and Onesteel Ltd Australia - Research Paper Example Today, millions of shares are traded every day on the world's stock markets. (Penman, 2003). Most often, investors see valuation as the first step toward intelligent investing. It has been argued (e.g. Penman 2003) that an investor can make informed decisions about where to invest once the value of shares are determine based upon the fundamentals. This is so because, without this value investors can either buy high or sell low Investors who trade on these stocks are often forced to ask themselves whether they are buying or selling at the right price. (Penman, 2003). In the face of this situation and their quest for an alternate answer, investors turn to various media including internet chat rooms, printed press, and "talking heads" on television and financial networks, who often voice opinions on what they feel the stock prices should be. (Penman, 2003). In addition, investors consult investment analysts who provide an almost endless stream of information and recommendations to sort out. There are often claims that some shares are undervalued and vice versa. (Penman, 2003). Faced with too much information, Investors at times get confused with no clear indication of what the true prices of stocks should be. (Penman, 2003). Under such circumstances, the investor either make decision based on his or her instinct, such investors according to Penman (2003) are intuitive investors while others who make their decision based on capital market efficiency are referred to as passive investors. Penman, (2003) further argues that in making their decision, passive investors assumed that the market price is a fair price of the shares quoted. These investment mechanisms appear to be very simple, as they do not require much effort. (Penman, 2003: pp 3). How ever that is not the case as neither passive nor intuitive investor turn to be better off in the face of their decision. This is so because these sets of investors can either pay to high or sell too low. Having said that, in the sections that follow, I will discuss analysis and valuation of Bluescope Steel Limited and One steel Limited in Australia including their products, employees, management, and corporate governance. I have also highlighted in a passing the methodology used in valuating the company. In the last section, I will make a conclusion and recommendation to prospective investors. 1.1BlueScope Steel Limited According to the Company 2008 report, BlueScope Steel