Fundamental analysis consists of methods to analyze and value stocks based on annual reports. Fundamental analysis is about to look at hard data about companies and shares in companies.
A company's ability to generate earnings and profits, both now and in the future, are whats counts in the fundamental analysis of a company.
To perform fundamental analysis, you need access to the company's annual reports, preferably for 5 to 10 years back in time. Some key terms in fundamental analysis is the PE-ratio, return on assets, required rate of return, return on equity, equity ratio and yield value.
Fundamental analysis is a real challenge when it comes to start-ups, growth companies and companies with losses. Start-up companies may only have a few years of history, growth companies has uncertain future profits and loss companies do not have much data to make good predictions.