The technique of Fundamental Analysis for stocks aids in making investment decisions based on a Company's Fundamentals. Its Primary Objective is to determine the security's Intrinsic Value, which can be compared to the Current Stock Price to determine if the stock is Overvalued or Undervalued.
To calculate the Intrinsic Value, various factors that can influence it, such as the company's Financial and Management Condition, Sector Condition, and overall Economic Condition, are studied.
To analyse a company's fundamentals, you can follow these five steps:
Utilize financial ratios for initial screening.
Gain an understanding of the company.
Examine the company's financial reports.
Evaluate the overall debt of the company.
Identify the company's competitors and their impact on the sector.