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Fundamental analysis definition

A long-practiced active management approach where practitioners compare a company's intrinsic value to market value to identify values.

Beginner

Fundamental analysis is the process of reviewing financial statements, business prospects, management quality and corporate strategy with the goal of deriving the current value of a company or security. This sometimes involves using discounted cash flows to derive an intrinsic value. It is often associated with adaptive, subjective and artistic approaches to security selection.

Synonym: valuation analysis


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Quiz

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Fundamental analysis, to many, is the most subjective of the four broad investment philosophies. | True or False?

True, relative to Passive, Quantitative and Technical

In a Sentence

Kay:  How would you characterize your position? Top-down or bottom-up?
Ann:  Hmm, I assume you mean the direction of our fundamental analysis .

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Keywords:
fundamental analysis
intrinsic value
financial statements
management quality
stocks
investment philosophy
companies
corporate strategy
discounted cash flow
DCF
free cash flow
dividend discount
active