What is fundamental analysis in stock trading?


by daniela , in category: Stocks and Equities , a year ago

What is fundamental analysis in stock trading?

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2 answers

by julius.brown , a year ago


Fundamental analysis is a method of evaluating a stock's value by analyzing the underlying factors that could influence its future performance. It involves examining a company's financial statements, such as its income statement, balance sheet, and cash flow statement, to assess its profitability, growth potential, and financial health.

Additionally, fundamental analysis takes into account qualitative factors like a company's business model, industry trends, competitive advantages, management team, and overall economic conditions. By examining both quantitative and qualitative factors, fundamental analysts aim to determine whether a stock is overvalued or undervalued.

This analysis involves various techniques, such as calculating financial ratios, assessing earnings growth rates, analyzing management's strategic decisions, and comparing a company's performance to its competitors and the broader market.

Fundamental analysis helps traders and investors make informed decisions about buying or selling stocks based on their assessment of a company's intrinsic value. It is often used by long-term investors who seek to identify companies with strong fundamentals and solid growth prospects.

by augustine , 7 months ago


Overall, fundamental analysis is a comprehensive approach to understanding the underlying factors that drive a company's stock price. It involves evaluating a company based on its financial statements, qualitative factors, and industry trends to determine its intrinsic value and make investment decisions.