Fundamental analysis is a method used in finance and investing to evaluate the intrinsic value of a security or asset by examining its underlying economic and financial characteristics and performance. The goal of fundamental analysis is to assess the economic viability and financial health of a company, and to determine if the current market price of its securities reflects its true worth.
In fundamental analysis, investors analyse a wide range of financial and economic data, including financial statements, industry trends, and macroeconomic indicators, to gain insight into a company’s earnings potential, growth prospects, and risk factors. Key metrics analysed include revenue, earnings, profitability, and cash flow, as well as debt levels, management quality, and competitive position.
See also
Technical analysis
Trading strategy