What is Fundamental Analysis

E

Ernest Palmeira

New Member
#61
#61
mr. tkpatnaik
if you are a positional trader and you have patience to wait for more considerable profits then there are possibilities for the stock to make a debut above 112 -120 levels...
if you want to book early profit well and good... you can shift focus on other stocks while this one consolidates and you get a better rate.... but here the main decision and risk factor is YOURS.... make decisions cautiously
 
R

ruselrones

New Member
#62
#62
Hi,
Fundamental analysts look at this information to gain insight on a company's future performance.The biggest part of fundamental analysis involves delving into the financial statements.
 
F

fundamentalvalue

New Member
#63
#63
I am sorry but have to say that fundamental analysis has nothing to do with these ratios. What you have been discussing p/e or any other multiple is relative valuation.

Fundamental analysis has to do with finding intrinsic value of a company by projecting future free cash flows and for that one needs to look around for similar companies and company's history in generating such cash flows. Although there are several assumptions goes in, some of the major projections include revenue growth, EBIT margins, capex projections, capital structure and the big estimating terminal value.

Looking into Balance sheet is 10% of the work as they are not that reliable in India and on top, one can always look at competitiors and more matured players in other countries to estimate data.

I am starting a blog series on fundamental valuation and relative valuation explaining each through real company example to create awareness.

If you want you can visit my blog: fundamentalvaluation.blogspot.com

PGDIMES said:
ANSON KALAVARAYIL said:
The fundamentals of a company depend on a lot of factors and the ratios given are only tip of an iceberg. PFA the excel sheet to understand the same: View attachment 12821 . Find the ratio analysis which is the heart of the fundamentals of the stock.

Happy trading.:clapping:
Click to expand...
Click to expand...
 
C

comrade_dav

New Member
#64
#64
You compare P/E ratio of some stocks in the same industry. But before that, you must analyze what industry or sector will be booming in the next year or even the next several years. After you have decide what industry you will invest, comparing P/E ratio of some stocks means comparing Earning per Share (performance of company) to its prices at the given time. Wheter it is expensive or not.
 
N

naharchetan

Member
#65
#65
hi if stock a has pe of 3 and stock b has pe of 4; in financial terms which stock's PE is higher a or b

I always thought the higher the number the higher the PE but the below phrase in a book confused me

A 14-year study of stocks
between 1957 and 1971, testing the efficient market hypothesis, revealed that
with consistency, lower-PE stocks out-performed higher-PE stocks. The study
included all stocks listed on the New York Stock Exchange (NYSE). Results
showed an average annual rate of return in six groupings:
6lowest PE 16.3%
5 13.6%
4 11.7%
3 9.3%
2 9.5%
1highest PE 9.3%

Putting these results another way, if an investor had placed $1 million in the
lowest PE stock group at the beginning of the period, it would have grown to
$8,282,000. The same amount invested in the highest-PE group would have
grown to only $3,473,000

pl can you advise?

thanks

chetan
 
prasadam

prasadam

Well-Known Member
#66
#66
Hi Chetan.

Higher the PE indicated that the scrip is costly.

For eg. scrip A & scrip B have an EPS of Rs. 100/- and price of A is 300/- and price of B is 400/-. so, A's PE is 3 and B's PE is 4.

All other things remaining equal, one should go for lower PE stocks.

hope this clarifies.
 
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