1 Answers: What Questions Would a Fundamental Analyst Ask?


There seems to be a good strategy behind Fundamental Analysis and I am looking for the kinds of questions asked by a Fundamental Analyst.

My plan is if I have a list of as many questions as possible then i can look at the stock I am considering and then apply the questions and work out the answers.

Then if I can find a stock which fits my criteria, has a good margin of safety, then I will invest knowing the company shares I have bought are good and will go up.

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James 4 years 1 Answer 685 views 0

Answer ( 1 )

  1. Some questions a Fundamental Analyst might ask are: Is the company’s revenue growing?

    Is it making profit? Is it able to repay its debts? How does it compare to industry competitors?

    Those are some of the few, but basically you would look at whether the company stock is a good investment.

    So the intrinsic value. Fundamental is based on the concept that the price of the stock does not fully reflect its real value.

    In the financial world, that real value is called the Intrinsic Value. So let’s take a small example. Say Microsoft is trading at $28 per share.

    After much analysis, you figure out that its intrinsic value, how much it’s really worth, stands at $34 per share. That is 21% higher than its Current Value.

    In the eyes of the Fundamental Analyst, that presents a great buying opportunity, as the stock would be called undervalued.

    In the opposite case where the current price is $34, but you find out that it’s actually worth $28, you would say that it’s overvalued.

    The largest assumption in Fundamental Analysis is that in the long run, the stock will always reflect the fundamentals.

    But no one really knows how long the long run is. It could be a period of days or even years. So that is what Fundamental Analysis is really about.

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