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    Fundamental Analysis

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    aruncbe07
    The document discusses the concept of fundamental analysis, which is a method of evaluating stocks based on internal factors like financial statements, management, and products of a company as well as external factors like the economy and industry to determine the company's intrinsic value and compare it to the current market price. Fundamental analysis aims to identify undervalued stocks by conducting an analysis of the economy, industry, and company to estimate future performance and find stocks trading below their intrinsic worth. The goal is to make informed investment decisions by determining what the fair price of a stock should be based on its fundamentals.

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    Fundamental Analysis

    Uploaded by

    aruncbe07
    43 views26 pages
    The document discusses the concept of fundamental analysis, which is a method of evaluating stocks based on internal factors like financial statements, management, and products of a company as well as external factors like the economy and industry to determine the company's intrinsic value and compare it to the current market price. Fundamental analysis aims to identify undervalued stocks by conducting an analysis of the economy, industry, and company to estimate future performance and find stocks trading below their intrinsic worth. The goal is to make informed investment decisions by determining what the fair price of a stock should be based on its fundamentals.

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    FA

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    The document discusses the concept of fundamental analysis, which is a method of evaluating stocks based on internal factors like financial statements, management, and products of a company as well as external factors like the economy and industry to determine the company's intrinsic value and compare it to the current market price. Fundamental analysis aims to identify undervalued stocks by conducting an analysis of the economy, industry, and company to estimate future performance and find stocks trading below their intrinsic worth. The goal is to make informed investment decisions by determining what the fair price of a stock should be based on its fundamentals.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    43 views26 pages

    Fundamental Analysis

    Uploaded by

    aruncbe07
    The document discusses the concept of fundamental analysis, which is a method of evaluating stocks based on internal factors like financial statements, management, and products of a company as well as external factors like the economy and industry to determine the company's intrinsic value and compare it to the current market price. Fundamental analysis aims to identify undervalued stocks by conducting an analysis of the economy, industry, and company to estimate future performance and find stocks trading below their intrinsic worth. The goal is to make informed investment decisions by determining what the fair price of a stock should be based on its fundamentals.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 26

    FUNDAMENTAL ANALYSIS

    “The greatest of all gifts is the


    power to estimate things
    at their true worth”
    Primary motive of buying shares is

     Dividend
     Capital Appreciation
    FUTURE DIV & CAP APP
     Determined by

    – Performance of the company


    – Performance of the industry
    – Performance of the economy

    Such an evaluation/analysis is
    FUNDAMENTAL ANALYSIS
     Not every stock that an investor
    invests in provides good returns.

     It requires learning the right


    techniques.

     Stock picking is a science.


    “One who abandons duty merely
    because it is
    difficult or fear of it
    does not get the benefits”
    Fundamental Analysis

    FA is a logical and systematic


    approach in estimating the
    future dividend and share price.
    Fundamental Analysis
     Basic premise of FA is
    – Performance of the company

    – Performance of the industry to which the


    company belongs to.

    – Performance of the economy where the


    industry is.
    Fundamental Analysis
    A stock’s price changes due to

    – Economy-wide factors : 30 – 35%


    – Industry factors : 15 – 20%
    – Company factors : 30 – 35%
    – Other factors : 15 – 25%
    Fundamental Analysis

    A detailed analysis of the


    fundamental factors affecting the
    performance of companies

    It is just like planning the entire war


    Fundamental Analysis
    FA is an approach to determine
    “ What ought to be the price”.

    Economic worth of share is


    identified.
    Fundamental Analysis

    That is known as
    “Intrinsic value”
    or
    “Fundamental Value”.

    The goal of analyzing a company's


    fundamentals is to find a stock's intrinsic
    value
    Fundamental Analysis

    “Intrinsic value” is compared with


    the market price.
    Fundamental Analysis

    If, Market Price < Intrinsic value

    Then the share is Under-priced.

    “BUY”
    Fundamental Analysis

    If, Market Price > Intrinsic value

    Then the share is Over - priced.

    “SELL”
    HICCUPS OF IV/FA
     Considers Q & Q
     It is the discounted value of cash
    that can be taken out of a business
    during its remaining life
     It’s an estimate only
     Different IVs are possible
     Needs to be updated
    Fundamental Analysis

     Therefore, a follower of
    fundamental analysis is guided by
    value
    Fundamental Analysis
     FA provides an analytical
    framework for rational investment
    decision making

    Called as
    “EIC Frame Work Analysis”
    Fundamental Analysis

    Don’t buy or sell shares on the


    basis of rumors or tips.
    Fundamental Analysis

    Go for and do detailed analysis

    Resulting

    “INFORMED INVESTING”
    Fundamental Analysis

    FA aims not to make speculative


    profit

    (Which needs - Frequent entering, exiting


    and switching)
    Fundamental Analysis

    FA aims to avoid the risk of loss


    from

    Buying an over-priced stock


    &
    Selling an under-priced stock
    Fundamental Analysis
    What Fundamentalists do?

    BUYS if the CMP = Intrinsic Value

    “FAIR PRICE” therefore


    normal returns

    BUYS Under-priced stock, therefore


    Abnormal returns
    Who bothers FA?
     Value investor
     looks for stocks with strong
    fundamentals - including earnings,
    dividends, book value, and cash flow
     Essence: Find
    F companies trading below their
    intrinsic worth (under-valued) and poised to
    grow in long-term
    Fundamental Analysis

    Company Analysis
    Industry Analysis
    Economy Analysis
    Fundamental Analysis
    Order of FA
    Economy Analysis

    Industry Analysis

    Company Analysis

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