Overview of Fundamental Analysis • Fundamental Analysis (FA) is a holistic approach to study a business. Investor wishes to For 5-8 it becomes extremely Invest in Company years or essential to understand the business from various X more perspectives. Over the long term, the stock prices of a fundamentally strong company tend to appreciate, thereby creating wealth for its investors. Sunday, 16 May 2021
Such examples in the Indian Market Sunday, 16 May 2021
EIC Bottom-Up Analysis Approach Top-Down Approach Econom Induystr Econo Comy pan Indmuystr Comy pa y ny Sunday, 16 May 2021
PE Analysis PE Ratio = Price to Earning Ratio PE Ratio = Market Price Per Share/ Earning Per Share. EPS = Net Income / No of Outstanding Share. Example - Net Income is EPS = 20,00,000/1,00,000 Total no2o0f,0S0h,a0r0e0s are = EPS = 20 Current 1P,r0ic0e,0=000 400 PE Ratio = 400/20 = 20 Sunday, 16 May 2021
• Companies with a high Price Earnings Ratio are often considered to be growth stocks. This indicates a positive future performance, and investors have higher expectations for future earnings growth and are willing to pay more for them. • Companies with a low Price Earnings Ratio are often considered to be value stocks. It means they are undervalued because their stock price trade lower relative to its fundamentals. This mispricing will be a great bargain and will prompt investors to buy the stock before the market corrects it. And when it does, investors make a profit as a result of a higher stock price. Sunday, 16 May 2021
Sunday, 16 May 2021
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