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Fundamental Analysis

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Financial Dictionary

Fundamental Analysis

A method of evaluating a stock by attempting to measure its intrinsic value. Fundamental analysts study everything from the overall economy and industry conditions, to the financial condition and management of companies.

Investopedia Commentary

In other words, fundamental analysis is about using real data to evaluate a stock's value. The method uses revenues, earnings, future growth, return on equity, profit margins and other data to determine a company's underlying value and potential for future growth.

Related Links

Introduction to Fundamental Analysis
What Are Fundamentals?
Advanced Financial Statement Analysis
Trader's Corner: Finding The Magic Mix Of Fundamentals And Technicals

See also: Annual Report, Asset Valuation, Balance Sheet, Income Statement, Intrinsic Value, Technical Analysis, Valuation

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Financial Dictionary

fundamental analysis

Analysis of security values grounded in basic factors such as earnings, balance sheet variables, and management quality. Fundamental analysis attempts to determine the true value of a security, and, if the market price of the stock deviates from this value, to take advantage of the difference by acquiring or selling the stock. Fundamental analysis may involve investigating a firm's financial statements, visiting its managers, or examining how a particular industry is affected by changes in the economy. Compare technical analysis.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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