What is fundamental analysis?
It's a way to work out a company's true value, it’s done by looking at company data. Investors look closely at the company to decide if shares are undervalued or overvalued. Fundamental analysis can be used alongside technical analysis, which focuses more on market trends outside of the company.
Where have you heard about fundamental analysis?
Traders use the term when they analyse a company's financial results, management performance and other economic data to see if there’s an investment opportunity.
What you need to know about fundamental analysis...
Ultimately, fundamental analysis is a way to try to predict a company's future share price. The method looks beyond a company's share price to measure its true financial health. Revenues, earnings and profit growth are some of the key numbers investors may scrutinise. Outside economic information, about the company's industry or country might be looked at too. This analysis strategy is championed by respected investor and businessman Warren Buffett.