Fundamental analysis

How it is used

Used by analysts, fund managers and long-term investors. They read annual reports, build models, look at ratios such as P/E and ROE, and compare the result with the share price. It is usually contrasted with technical analysis.

Example sentences

1. Our fundamental analysis suggests the company's profits will keep growing for several years.

2. He relies on fundamental analysis and ignores short-term price charts.

Common collocations

• do fundamental analysis
• based on fundamental analysis
• fundamental analyst
• company fundamentals

Related terms

• technical analysisA way of studying past prices and trading volume on charts to identify trends and patterns that traders use to time their buying and selling.
• earnings reportA company's official announcement of its revenue, profit and other financial results for a quarter or a year, often with comments on what it expects next.
• P/E ratioShort for price-to-earnings ratio: a company's share price divided by its earnings per share. It shows how much investors pay for each unit of yearly profit.
• undervaluedPriced lower than its estimated real value, based on profits, assets, cash flow or growth prospects. Like 'overvalued', it is a judgement.
• book valueThe value of a company according to its balance sheet: total assets minus total liabilities. It is the shareholders' equity shown in the accounts.

More terms: Technical & Fundamental Analysis

• moving average
• support level
• resistance level
• candlestick chart