Define: Fundamental Analysis

Business, Legal & Accounting Glossary

Definition: Fundamental Analysis



Advertisement



Full Definition of Fundamental Analysis


Fundamental analysis attempts to find the actual value of a stock — ie, its ability to generate future cash flows — to make investment decisions. Fundamental analysis thus focuses on a company’s financial results. Specifically, fundamental analysis emphasizes forecasts of a company’s earnings and revenue growth rates, valuation ratios like price to earnings, and financial ratios like profit margins. Fundamental analysis also looks to conditions in the industry sector(s) in which the company operates and the broader economic outlook. Fundamental analysis stands in stark contrast to technical analysis, which ignores company fundamentals and looks only at the movement of stock prices and market activity. Both fundamental analysis and technical analysis have their doctrinaire adherents who consider the opposing approach useless. Most market pros, however, recognize that both fundamental analysis and technical analysis have their role in forecasting stock prices.


Advertisement




Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/fundamental-analysis/
Modern Language Association (MLA):
Fundamental Analysis. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. April 09, 2020 https://payrollheaven.com/define/fundamental-analysis/.
Chicago Manual of Style (CMS):
Fundamental Analysis. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/fundamental-analysis/ (accessed: April 09, 2020).
American Psychological Association (APA):
Fundamental Analysis. PayrollHeaven.com. Retrieved April 09, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/fundamental-analysis/

Definition Sources


Definitions for Fundamental Analysis are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February, 2020