We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is Fundamental Stock Analysis?

Jim B.
By
Updated May 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Fundamental stock analysis is a process used to choose stocks, which requires the investor to study certain aspects of the company issuing the stocks. These aspects are known as the fundamentals, and they are generally believed by certain investors to reveal the actual worth of a company better than its stock price. The actual worth of a company is its intrinsic value, and comparing it to the stock price will indicate whether a stock is overpriced or undervalued. Some of the attributes studied during a fundamental stock analysis are discounted cash flow, financial ratios, and less tangible aspects of a company such as leadership and prevailing market conditions.

There are many different ways to choose a stock, but one of the soundest methods is to study all of the pertinent information that can be found on the company issuing the stock. By doing this, investors should be able to tell not only what a company is worth at the present time, but they should also have a rough estimate of how the company might do in the future. Studying the ins and outs of a company is a process known as a fundamental stock analysis.

It is important to understand how a fundamental stock analysis differs from a technical analysis, which is the other primary method used by investors to pick stocks. Whereas a fundamental analysis takes into account all of the information surrounding a company, a technical analysis isn't concerned with any of that. Instead, a technical analysis is more concerned with how the price of a stock has performed in the past and how that past performance predicts its future performance.

Central to a fundamental stock analysis is the concept of intrinsic value. The idea of intrinsic value is that a stock should be worth to its investors what it is worth to its owners, since stockholders essentially have a small portion of ownership. Company owners are concerned with how much profit they are receiving. As a result, the most profitable companies are the most valuable to investors, regardless of what the current stock prices might be.

When performing a fundamental stock analysis, there are many different fundamentals from which an investor can choose to get an idea of a company's worth. The discounted cash flow is an estimate of a company's profits when taking into account the fact inflationary factors that cause money to lose value over time. Financial ratios take two pieces of financial information and turn them into mathematical ratios to allow for easy comparison between companies. Finally, qualitative analysis of factors like company leadership and marketing strategies can be a major part of fundamental analysis.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Jim B.
By Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own successful blog. His passion led to a popular book series, which has gained the attention of fans worldwide. With a background in journalism, Beviglia brings his love for storytelling to his writing career where he engages readers with his unique insights.
Discussion Comments
Jim B.
Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.