Fundamental analysis

Fundamental analysis consists of methods to analyze and value stocks based on annual reports. Fundamental analysis is about to look at hard data about companies and shares in companies.

A company's ability to generate earnings and profits, both now and in the future, are whats counts in the fundamental analysis of a company. To perform fundamental analysis, you need access to the company's annual reports, preferably for 5 to 10 years back in time. Some key terms in fundamental analysis is the PE-ratio, return on assets, required rate of return, return on equity, equity ratio and yield value.

Fundamental analysis is a real challenge when it comes to start-ups, growth companies and companies with losses. Start-up companies may only have a few years of history, growth companies has uncertain future profits and loss companies do not have much data to make good predictions.