Fundamental Analysis

Fundamental analysis is one of the cornerstones of investing, and gives you tools to help determine the value of different investments. From SWOT analysis to PE ratios, learn the tools of fundamental analysis here.
Frequently Asked Questions
  • What is the difference between qualitative and quantitative fundamental analysis?
    Quantitative fundamental analysis analyzes an investment according to easily measured factors, such as the earnings or assets of the company that issued a stock. Qualitative analysis looks at harder to measure factors such as the quality of a company’s management or the strength of its brand. There is not a hard line between the two and some factors can fall into both categories.
  • What is the difference between fundamental analysis and technical analysis?
    Fundamental analysis looks to see whether an investment is overvalued or undervalued based on underlying economic conditions, as well as the finances of the company or other organization that issued a stock or bond. Technical analysis instead looks at patterns in the price of an investment to predict future movements in that investment’s price.
  • Why do investors read financial statements when doing fundamental analysis?
    Financial statements contain many of the key metrics that help investors determine if a company is undervalued or overpriced. Financial statements have a company’s level of profitability, how much it holds in different types of assets, as well as how fast its sales and profits have grown over time. All of these figures are core parts of determining if a company is properly valued.
  • What is a good PE ratio for a stock?
    There is no one answer to this question as different companies will naturally have different PE ratios. For example, mature companies in defensive stock sectors generally have low PE ratios, while early stage companies or companies in fast-growing sectors often have very high PE ratios. To make the most of PE ratio as a metric of company value, make sure to compare PE ratios to similar companies in similar sectors, as well as to the same company at different periods in the past to get better comparisons.
Key Terms

Explore Fundamental Analysis

8xbet1Liên kết đăng nhập
Required Rate of Return (RRR): Definition and Examples
Book Value Per Common Share (BVPS): Definition and Calculation
8xbet1Liên kết đăng nhập
P/E Ratio Definition: Price-to-Earnings Ratio Formula and Examples
8xbet1Liên kết đăng nhập
Terminal Value (TV) Definition and How to Find The Value (With Formula)
8xbet1Liên kết đăng nhập
10-K: Definition, What's Included, Instructions, and Where to Find it
8xbet1Liên kết đăng nhập
Amortization vs. Depreciation: What's the Difference?
8xbet1Liên kết đăng nhập
Bottom-Line Growth vs. Top-Line Growth: What's the Difference?
Cash Cow: Definition, Investment Type, and Examples
8xbet1Liên kết đăng nhập
Metrics
8xbet1Liên kết đăng nhập
Porter's Five Forces Explained and How to Use the Model
8xbet1Liên kết đăng nhập
SWOT Analysis: How To With Table and Example
8xbet1Liên kết đăng nhập
What Causes Dividends per Share to Decrease?
Price to Free Cash Flow: Definition, Uses, and Calculation
8xbet1Liên kết đăng nhập
What Are Fundamentals? Types, Common Analysis Ratios, and Example
8xbet1Liên kết đăng nhập
What Is Market Value, and Why Does It Matter to Investors?
8xbet1Liên kết đăng nhập
Using EV/EBITDA and Price-to-Earnings (P/E) Ratios to Assess a Company
8xbet1Liên kết đăng nhập
Biotechnology vs. Pharmaceuticals: What's the Difference?
8xbet1Liên kết đăng nhập
Porter's 5 Forces vs. SWOT Analysis: What's the Difference?
8xbet1Liên kết đăng nhập
Sell in May and Go Away': Definition, Statistics, and Drawbacks
Consensus Estimate: Definition, How It Works, and Example
8xbet1Liên kết đăng nhập
Should You Pay More Attention to the EV/EBITDA or P/E Multiple?
8xbet1Liên kết đăng nhập
Operating Margin vs. EBITDA: What's the Difference?
8xbet1Liên kết đăng nhập
Valuing a Stock With Supernormal Dividend Growth Rates
8xbet1Liên kết đăng nhập
What Does It Mean When a Company's P/E Ratio Reads "N/A"?
Top 3 Pitfalls of Discounted Cash Flow Analysis
8xbet1Liên kết đăng nhập
Can a Company Have Too Much Cash?
8xbet1Liên kết đăng nhập
Average Selling Price (ASP): Definition, Calculation and Examples
8xbet1Liên kết đăng nhập
Earnings Before Interest, Depreciation, and Amortization (EBIDA)
How do you calculate the excess return of an ETF or indexed mutual fund?
8xbet1Liên kết đăng nhập
Weighted Average Shares vs. Shares Outstanding
How to Become Your Own Stock Analyst
8xbet1Liên kết đăng nhập
Economic Depreciation: Definition, Vs. Accounting Depreciation
8xbet1Liên kết đăng nhập
Residual Sum of Squares (RSS): What It Is, How to Calculate It
Zeta Model: Meaning, Formula, Significance
8xbet1Liên kết đăng nhập
Winsorized Mean: Formula, Examples and Meaning
Can Whirlpool Remain Durable?
8xbet1Liên kết đăng nhập
How to Analyze Corporate Profit Margins
8xbet1Liên kết đăng nhập
Research and Development (R&D) Definition, Types, and Importance
8xbet1Liên kết đăng nhập
Cyclical vs. Non-Cyclical Stocks: What's the Difference?
How Should I Analyze a Company's Financial Statements?
How Are a Company's Stock Price and Market Cap Determined?
SEC Form S-1: What It Is, How to File It or Amend It
8xbet1Liên kết đăng nhập
Dun & Bradstreet (D&B): What It Does, Funding, History, and Rating
8xbet1Liên kết đăng nhập
Specific Identification Inventory Valuation Method
8xbet1Liên kết đăng nhập
Comparing ETF Gross vs. Net Expense Ratios
8xbet1Liên kết đăng nhập
Multiple Compression: Meaning, Overview, Examples
8xbet1Liên kết đăng nhập
Diluted Normalized Earnings Per Share: What It Is, How It Works
8xbet1Liên kết đăng nhập
Attest Service: What it is, How it Works
8xbet1Liên kết đăng nhập
Accounting Postulate: What it is, How it Works
8xbet1Liên kết đăng nhập
Correlation Coefficients: Positive, Negative, and Zero
Primary Distribution: What it is, How it Works, Example
Earnings Season: What it is, How it Works
Workflow: What It Is, How It Works, Digital Era
Buy: What it Means, Consumer Versus Business, Types
Work Cell: What it is, How it Works, Example
8xbet1Liên kết đăng nhập
What Is Market Risk Premium? Explanation and Use in Investing
8xbet1Liên kết đăng nhập
What Is the Best Measure of Stock Price Volatility?
8xbet1Liên kết đăng nhập
When to Use Fundamental, Technical, and Quantitative Analysis
8xbet1Liên kết đăng nhập
Macro Environment: What It Means in Economics, and Key Factors
What Are Some Examples of Companies That Have High Capital Expenditures (CapEx)?

Fundamental Analysis