Fundamental Analysis
Valuing a company from its financial statements, management, and industry.
What is Fundamental Analysis?
Analyzes earnings, cash flow, balance sheet strength, competitive position, management, and the economic backdrop to estimate intrinsic value. Top-down starts with the economy and narrows to sectors and companies; bottom-up starts with the company.
Fundamental Analysis: a worked example
Comparing a retailer's P/E, debt-to-equity, and sales growth against its competitors.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Dividend Discount Model
A stock is worth the present value of its future dividends.