In this last article, we discussed the basics of industry analysis in fundamental research. In this article, we cover the second pillar of fundamental analysis – company analysis.
Company analysis involves a deep dive into the specifics of a particular company to assess its intrinsic value and investment potential. Here are the key components of company analysis:
- Financial analysis: As part of it, you examine the company’s financial statement, which includes income statement, balance sheet, cash flow, etc. You also calculate different financial ratios and assess financial performance trends.
- Valuation analysis: You determine the intrinsic value of the company using valuation methods like PE Ratio, dividend discount model, discounted cash flow, etc.
- Management Analysis: You evaluate the quality of the management team and assess their strategic vision and execution capabilities.
- Risk Assessment: Identify potential risks the company faces or may face, like operational, financial, and regulatory risks. Also, assess the company’s ability to manage risks.
How does company analysis help investors?
By conducting a thorough company analysis, you can:
Identify undervalued stocks: Discover companies trading below their intrinsic value.
Make informed investment decisions: Base investment choices on solid financial data and analysis.
Conclusion
If fundamental analysis seems too tough and you believe investing in stock after doing fundamental analysis is not something you are comfortable doing, let technology do everything for you. Not only fundamental, but Jarvis Invest also does technical analysis before suggesting artificial Intelligence stocks in India for your portfolio. Check Jarvis Invest for more details.