Fundamental Analysis

Fundamental Analysis (FA) deals with the company's income sources, cash flow, financial statements, company health, profitability, company management, its competitive advantage, industry trend and many more to forecast the future sustainability of the company as well as future growth.

In a word Fundamental Analysis tries to know the business performance of a specific company.

After analyzing all the business prospect and future performance the analyst identifies a true value (intrinsic value) of the company. Then he compares the true value with market value to decide if the stock is undervalued or over valued.

If he finds the stock undervalued he decides to buy, if find it over valued he recommends a sell.