Fundamental Analysis

Understanding Fundamental Analysis

Fundamental analysis is a method of assessing a company’s financial health and performance by analyzing its financial and economic data. The goal of fundamental analysis is to determine a company’s intrinsic value and stock price by examining its financial statements, industry trends, management team, competition, and other relevant factors. 카지노사이트

Sources of Fundamental Analysis

Fundamental analysis uses publicly available financial data to assess the value of an investment. Data is captured in financial statements such as quarterly and annual reports and documents such as 10-Q (quarterly) or 10-K (annual). The 8-K is also informative because public companies are required to file it with every reportable event such as an acquisition or change of management.


Most public companies — and many private companies — post annual reports in the Investor Relations section of their websites detailing the financial decisions they made and the results they achieved during the year. For example, a fundamental analysis of the value of bonds can be performed by looking at economic factors such as interest rates and general economic conditions.

You should therefore evaluate the bond market and use financial data from similar bond issuers. Finally, the issuer’s financials should be analyzed, including external factors such as possible changes in its credit rating. You can also read the 8-K, 10-Q, 10-K, and Annual Reports to find out what they’re doing, what their goals are, or other concerns. Fundamental analysis uses a company’s sales, earnings, future growth, return on equity, profit margins, and other data to determine a company’s fundamental value and potential for future growth.

Intrinsic Value

A key assumption of fundamental analysis is that current stock prices often do not fully reflect a company’s worth when compared to publicly available financial data. The second assumption is that the value reflected in company fundamentals is more closely related to the actual value of the stock.

Intrinsic value means something different in stock price than in options trading. Options are priced using a standard intrinsic value calculation, while stocks can be calculated in a number of ways. 온라인카지노사이트

For example, suppose a company’s stock is $20 and after extensive research on the company, an analyst comes to the conclusion that it should be worth $24. Another analyst does similar research and decides However, that it should be worth $26, the average of these estimates and anticipate that the stock’s intrinsic value could be close to $25.Investors often view these estimates as very significant because they want to buy stocks at prices well below these intrinsic values.

Fundamental vs. Technical Analysis

This analysis method is in sharp contrast to technical analysis, which attempts to predict price direction by analyzing historical market data such as price and volume. Technical analysis uses price trends and price movements to create indicators. Some indicators form patterns with names similar to their shapes, the head and shoulders pattern.

Others use trend lines, support and resistance to show how investors view investments and what is about to happen. Some examples are a symmetrical triangle or a wedge. Fundamental analysis is based on the financial information of the company whose shares are being analyzed. Indicators and metrics are created from data showing how a company compares to similar companies.

Quantitative and Qualitative Fundamental Analysis

The problem with defining the word foundation is that it can encompass anything related to the economic well-being of a company. This includes figures such as sales and profits, but also everything from a company’s market share to the quality of its management. The various underlying factors fall into two categories: quantitative and qualitative.

Qualitative Fundamentals to Consider

There are four key fundamentals that analysts always consider when analyzing a company. They are all qualitative and not quantitative. These include:

Business model

What exactly does the company do? It’s not as easy as it seems. If the company’s business model is based around selling chicken at fast food restaurants, is it making any money? Or maybe it’s just the licenses and franchise fees?

Competitive Advantage

A company’s long-term success depends primarily on its ability to maintain—and maintain—a competitive advantage. Powerful competitive advantages such as the Coca-Cola brand and Microsoft’s dominance of the PC operating system drive a wedge around the company, allowing it to keep the competition in check and enjoy growth and profits. If a company can gain a competitive edge, its shareholders can be well rewarded for decades to come.


Some believe that management is the most important criterion for investing in a company. It makes sense: Even the best business model is doomed to fail if management doesn’t execute the right plan. 바카라사이트

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