Analyzing the financial status, management, growth potential, market share and other fundamentals is called fundamental analysis of a company. In simple words, Fundamental Analysis of a company is study of basic fundamentals of a company that can decide its future and growth.
Different companies compete within a industry. A company can fall in the category of a very attractive industry or sector but this is not a guarantee that the company will succeed. There are several examples where an industry is doing will but some companies within that sector is not doing well. On the other hand, there are examples where a company that fall under a poorly performing sector but the company is growing well and making profits.
When doing financial analysis of a company, investors must look at both financial and non-financial aspects. Some of the points to consider while doing fundamental analysis of a company are as follows:
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| Fundamental Analysis of a Company |
- Company history and its line of business.
- Product of the company and market demand for those products.
- Market Share.
- Top management of the company.
- Patents and trademarks of the company.
- Partnership with other companies.
- Competition with other similar companies.
- Future business plans and projects.
- Market Cap – small, medium or large.
- Volume of trade in stock exchange for the scrip.
- Earnings-per-Share.
- P/E ratio.
- Growth in the past in terms of sales and profit.
Resources & References
- How to Select Best Stocks to Buy
- Price-To-Earnings Ratio (P/E Ratio)
- Using Value, Growth, Income & GARP for Stock Analysis
- Share Market Panic - What to Do? Buy, Sell or Hold?
- Quality of Stocks Vs Quantity of Stocks
- How Many Stocks to Buy - Portfolio Management
- Fundamental Analysis Tools
- Advantages of Fundamental Analysis
- Fundamental Analysis for Dummies
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