Fundamental analysis is a method of evaluating the intrinsic value of a security by analyzing its financial and economic characteristics. It is used to determine the value of a stock by examining factors such as the company's financial statements, industry trends, and economic conditions.
There are several tools and techniques that can be used in fundamental analysis, including:
Financial statement analysis: This involves reviewing a company's financial statements, such as its income statement, balance sheet, and cash flow statement, to assess its financial health and performance.
Industry analysis: This involves examining the trends and conditions within the industry in which the company operates, including factors such as competition, regulatory environment, and market demand.
Economic analysis: This involves examining the overall economic environment in which the company operates, including factors such as GDP growth, inflation, and interest rates.
Fundamental analysis is often used to help investors determine the intrinsic value of a stock and to identify undervalued or overvalued stocks. However, it is important to note that fundamental analysis is just one tool that can be used in stock evaluation and that past performance is not necessarily indicative of future performance. It is also a good idea to consult with a licensed financial advisor or to seek the advice of a financial professional before making any investment decisions.
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