The fundamental analysis involves the assets, revenues, liabilities & other financial terms of company. The analysis is all about gaining insights of company’s performance. In addition, here is some fundamental analysis strategies shared to follow:
Earnings per Share:
EPS is generally used as a performance indicator of the company for long period of time. In fact, there are several ways for calculating the EPS of particular company depending on investor’s objective. To predict the future stock price, fundamental analysis works as an effective stock investment picksto analyze the company’s value, thereby calculating EPS of company.
Book Value per Share:
Book value is implemented to measure the net worth of company. The net worth of the company is termed as liquidation value of company. The book value per share analyzes the present market value of company’s assets.
Net Return on Equity:
ROE is implemented to measure the company’s generated return, invested by shareholders. The generated return is a percentage of shareholders return on equity. It’s recommended to have KLSE stock picks before investing in the market. The ROE is expressed in percentage & calculated by:
Return on Assets:
ROA is a kind of indicator that indicates that how the company is profitable to asset management. ROE provides idea about how well the company’s management is, to generate the profit potential. The return on Assets is calculated as:
Net Income/Total Assets
The Final Word:
In order to analyze the company’s net worth, fundamental analysis plays an important role to get a clear picture about company’s related asset. In addition, it is worth to analyze the earnings by comparing it against company’s previous ROA numbers.