Fundamental

Profitability Ratios for Fundamental Analysis

Profitability ratios are by used by fundamental analysts to evaluate a company’s financial performance by measuring the costs the company incurs against its ability to generate earnings. Profitability ratios can help potential investors gain an understanding of the debt and asset management of a company and how well it is performing over time and [...]

Porter’s Five Forces for Industry Analysis

Porter’s Five Forces is a framework for analyzing five of the major competitive elements that shape an industry. Developed by Michael E. Porter, the model can help an investor understand the strengths and weaknesses of an industry to assess its potential for profitability or “attractiveness”. An unattractive industry is one that limits profitability [...]

Find Growth Stocks Through Fundamental Analysis

Growth investing is one of the primary investing approaches investors may choose in finding worth stocks for their portfolio. Finding growth stocks is about seeking out those companies that show promise for high growth when compared to other stocks within their industry or the market as a whole. Growth investors are typically making [...]

Qualitative Factors in Fundamental Analysis

Qualitative analysis is that part of fundamental analysis where the investor looks at the intangible factors of the company as part of a company as part of the process of assessing its health and future prospects. While this part of the fundamental analysis process is more subjective than the quantitative aspect (which looks at [...]

What is Goodwill and How Does a Company Create it?

Goodwill is an accounting term used to reflect the portion of the value of a company over and above its book value. Goodwill is most often evaluated in the case of a company acquisition as it reflects an intangible asset; the premium the buyer is willing to pay for the company beyond its tangible [...]

The Importance of Retained Earnings

Retained earnings, also known as “accumulated earnings” or “retained capital” refer to the portion of net income the company retains as opposed to distributing those funds to shareholders in the form of dividends. A company’s retained earnings are typically reinvested into its core business or used to pay down debt. A company’s retained [...]

Understanding Earnings per Share and
its Impact on Stock Price

A company’s Earnings per Share (EPS) represents the portion of the company’s earnings (after deducting taxes and preferred share dividends) that is distributed to each share of the company’s common stock. The EPS measure gives investors a way to compare stocks in an “apples to apples” way.

The Importance of Earnings per Share in [...]

The Warning Signs and Impact of a Dividend Cut

For income-oriented investors, dividend-paying stocks can represent a central part of a stock portfolio. Dividend stocks can offer investors great financial flexibility by providing the opportunity to either reinvest the payments or use it as a source of income. For fundamental investors, dividends add creditability to the investment in a company since dividends [...]

How to Find Wide Economic Moat Companies

An Economic Moat is a long-term competitive advantage that creates a market barrier to other firms and can enable a company to maintain very high profit levels. The term “economic moat” was coined by the great investor Warren Buffet who believes that investing in a company with a substantial economic moat is safer than [...]

Evaluating Company Management in Fundamental Analysis

When evaluating a stock, many investors will look at the strength and effectiveness of company management as part of the due diligence process. The corporate scandals of recent years have reminded all of us of the importance of having a high-quality management team in place. The role of the management team, as far [...]