FUNDAMENTAL ANALYSIS OF A COMPANY:
In our previous post, we have discussed the fundamental analysis in general of the stock market. Now, let us dive in deeper to understand how to do a fundamental analysis of a company. In this post, we can discuss the factors that should be considered while doing the fundamental analysis of a company.
INTRODUCTION:
Since the existence of the stock market, fundamental analysis has proven to be one of the most rewarding approaches to evaluating the performance of a company. Fundamental analysis involves assessing the intrinsic value of a security based on economic, financial, qualitative, and quantitative factors. Ideally, when doing fundamental analysis, one should evaluate the intrinsic value of a security and compare it with its current stock price to determine if it is overvalued or undervalued.
HOW TO DO A FUNDAMENTAL ANALYSIS OF A STOCK? :
- Know about the company.
- Study the Financials of the company.
- Know about the industry the company belongs to.
- Know about the competitors of the company.
- Analyze the future prospects of the company.
- Review all the aspects from time to time.
The above points are some of the most important factors to be considered while doing a fundamental analysis of a company.
KNOW ABOUT THE COMPANY:
When investing in a company, you should understand its operations as well as its mission and objectives. If you do so, you can get an overview of how the company is performing, whether the company is making wise decisions towards its future goals, and whether you should keep or sell the stock.
A good way to find out about a company is to go to its website and learn about its management, its promoters, and its products.
STUDY THE FINANCIALS OF THE COMPANY:
Following the company's analysis, start investigating its financials, such as its balance sheet, its profit-loss statements, its cash flow statements, its operating cost, revenue, and expenses. You can evaluate the company's profit growth and its CAGR [Compound Annual Growth Rate]. If the net profit has increased consistently over the last five years, it can be considered a healthy indicator of the company's growth.
KNOW ABOUT THE INDUSTRY THE COMPANY BELONGS TO:
Apart from knowing about the company and understanding its growth, It is also recommended to know about the industry to which the company is contributing. It will be helpful if there are any global or economic factors that affect the particular industry. It will have a huge impact on the stock prices of the companies in the particular industry/ sector.
KNOW ABOUT THE COMPETITORS OF THE COMPANY:
You should choose a company that is among the best of its peers. Seek out companies that perform better than the others. Ideally, it will have better prospects for the future, upcoming projects, and new equipment.
ANALYZE THE FUTURE PROSPECTS OF THE COMPANY:
The best use of fundamental analysis is when you want to keep it for a long time. I recommend investing in companies whose products will still be useful in 15-25 years and whose goals and missions are visioned for the long term.
REVIEW ALL THE ASPECTS FROM TIME TO TIME:
Keep yourself updated about the company that you invested in. Never forget about a company after you invest in it. Keep up to date on all the company's news and financial performance. Consider selling the stock if anything goes wrong.
These are some of the basic things we should do while analyzing the company fundamentally. Apart from these, there are lot more factors to analyze. But these factors will give you a proper understanding of the stock in which you are willing to invest.
We will see some of the fundamental ratios we should use to do fundamental analysis in a separate post. Till that. see you...
DISCLAIMER:-The content of this site is only for educational purpose. I am not SEBI Registered. The motive of this site is to share my knowledge on share market to new budding investors and others who are learning about stock market
My Kind request to my site viewers, Before taking any decision please do self analysis, consult or discuss with Your financial Advisor .
மறுப்பு:-இந்த தளத்தின் உள்ளடக்கம் கல்வி நோக்கத்திற்காக மட்டுமே. நான் செபியில் பதிவு செய்யப்படவில்லை. இந்த தளத்தின் நோக்கம், பங்குச் சந்தையைப் பற்றிய எனது அறிவை புதிய வளரும் முதலீட்டாளர்கள் மற்றும் பங்குச் சந்தையைப் பற்றி அறிந்துகொள்ளும் மற்றவர்களுக்குப் பகிர்வதாகும்
எனது தள பார்வையாளர்களுக்கு எனது அன்பான வேண்டுகோள், எந்தவொரு முடிவையும் எடுப்பதற்கு முன், சுய பகுப்பாய்வு செய்யுங்கள், ஆலோசனை செய்யுங்கள் அல்லது உங்கள் நிதி ஆலோசகருடன் விவாதிக்கவும்.
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