Fundamental analysis has been one of the most rewarding analyses in the history of stock markets. In fundamental analysis, you evaluate a security by using economic, financial, qualitative and quantitative factors to determine its intrinsic value. It is believed that macroeconomic and microeconomic factors can affect a security’s value.
These factors can be economic conditions, industry conditions, financial conditions and management’s proficiency. The main motive while doing a fundamental analysis should be to evaluate a security’s intrinsic value and compare it with the current stock price of the security, thus determining if the security is undervalued or overvalued.
How to do Fundamental Analysis of Stocks:
- 1. Understand the company
- 2. Study the financial reports of the company
- 3. Check the debt
- 4. Find the company’s competitors
- 5. Analyse the future prospects
- 6. Review all the aspects time to time