Defining fundamental analysis
Fundamental analysis is a method of
valuation of stocks from the
economic and financial analysis to
predict the price movements of
The most important information can
be analyzed solid financial
reporting and non-financial
information, for example, estimates
of the growth in demand for
competing products, industrial
comparisons, and the whole economy.
For the fundamentalists, the market
share price tends to its intrinsic
value. If the intrinsic value of the
population is higher than the
current market price, the investor
buys the population, and whether the
intrinsic value of the population
was below the market price of the
sale of shares to investors.
To start doing fundamentalists study
of present and future health of the
economy as a whole. In this step,
you should try to determine the
direction and level of interest
After analyzing the economy as a
whole, companies are considered
individually. They must analyze the
factors that make us a competitive
advantage in its sector, such as
management experience, the history
of activity, growth potential,
low-cost producer etc.
Some expressions of fundamental
# 1 - EPS (earnings per share)
The proportion of company profits
for each outstanding common share.
The amount is calculated by dividing
the number of shares of common
shares. For example, a company that
earned $ 10 million last year and 10
million shares to report earnings
per share of $ 1
# 2 - P / E ratio (price / EPS)
Also known as â€œother incomeâ€, stock
price divided by earnings per share.
P / E ratio could either reported
gains of recent years, or use
analysts forecasts next year result.
P / E gives investors an idea of how
much they pay for the company to
# 3 - Dividend
Dividend is the sum of the benefits
that the company pays for people who
own shares in the company. If the
company gets an advantage, some of
this money often get them back into
society, and urged retained
earnings, and some of them be paid
to shareholders as dividends.
# 4 - Value
The carrying value of the asset or
group of assets, sometimes at the
price they were originally purchased
(original cost), in many cases equal
to the purchase price.
# 5 - growth stocks
Analysts estimate the profitability
of the company capital, net income
and capital division of the company.
To classify as an increase in
stocks, analysts expect that at
least 15% return on capital.