Definition

Noun: 1. A method of evaluating a security's intrinsic value: This involves analyzing related economic, financial, and other qualitative and quantitative factors. The goal is to determine a value that can be compared with the security's current price to assess whether it is undervalued or overvalued. 2. An investment strategy based on fundamental analysis: This refers to the practice of making investment decisions by studying a company's fundamentals, such as its earnings, revenue, assets, liabilities, and growth potential, rather than relying solely on price movements or market trends.

Usage Examples

• Investors who use fundamentals analysis often examine a company's balance sheets and income statements.
• Successful long-term investing typically requires a solid understanding of fundamentals analysis.
• The analyst's report was based on thorough fundamentals analysis of the tech sector.

Advanced Usage

• "to perform fundamentals analysis on": To conduct this type of evaluation on a specific company or asset.
  • Before investing, it is wise to perform fundamentals analysis on the company.
• The term is often contrasted with "technical analysis," which focuses on statistical trends derived from trading activity, such as price movement and volume.

Variants and Related Words

• Fundamental Analysis: This is a more common and identical variant of the term "fundamentals analysis." The meaning is the same.
• Fundamental Analyst (n): A person who practices fundamentals analysis.
  • The fundamental analyst recommended buying the stock based on the company's strong cash flow.
• Fundamentals (n): The core financial data and qualitative factors (e.g., management, industry position) that are analyzed.
  • The company's fundamentals are very strong.

Synonyms

• Fundamental Analysis: (Identical variant)
• Financial Statement Analysis: (A key component of fundamentals analysis)
• Security Analysis: (A broader term that can include fundamentals analysis)

Related Phrases

• Bottom-up analysis: An investment approach that starts with fundamentals analysis of individual companies before considering the overall economy or market (a common strategy within fundamentals analysis).
• Value investing: An investment paradigm that is heavily reliant on fundamentals analysis to find undervalued securities.

Noun

1. (stock exchange) the use of fundamentals as an investment strategy