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Fundamentals Analysis is a way to analyze the real value of the company from a number.
We judge not only the movement of stock price but also sales, profit, growth, and financial status.
In this article, we will explain the indicators that beginners should look first and how to use them in practical practice.
Fundamentals Analysis
In conclusion, fundamentals analysis is an analysis to see the company’s contents rather than stock price.
、
Will this company benefit in the future?
How to check
For example:
- Is sales growing?
- Profit is stable
- Is there too much debt?
- Is there a growth potential?
- Is stock price too high to corporate value?
If you see only stock price, it will be easier to flow to popularity and expectations.
That’s why you need to see the power of your company.
Minimum of 3 indicators
Beginners are easy to understand when starting from the following three.
1. Sales
Net sales are numbers to see the company's scale and growth.
Sales may increase in demand for products and services.
However, it is dangerous to judge only by sales.
For example:
- Sales are increasing
- However, profit is reduced
In this case, there is a possibility that there is a cost increase or price reduction competition.
Net sales are the basis of the company's growth.
2. Operating income
Operating income is an indicator of how much you earn in the business.
What’s important is that you can continue to profit.
For example:
| State | View |
|---|---|
| Increase sales + increase profit | Good |
| Inc ing sales and profit reduction | Cost deterioration potential |
| Sales reduction + profit increase | Possibility of temporary cost reduction |
| Sales reduction + profit reduction | Possibility of business environment deterioration |
Profits are similar to the company’s physical strength.
Even if sales are large, companies that do not have profits may be less attractive to shareholders.
3. PER
PER is a well-known indicator called stock return.
、
Is the stock price higher for profits?
See numbers.
The basic formula is:
PER = stock price ÷ profit per share (EPS)In general,
- Low PER → Low discount
- High PER → High growth expectations
See
However, it is dangerous to judge only by PER.
Growing companies may grow even if they are low PER.
Financial safety is also important
The profit is not enough.
What is important is that you can withstand depression.
For example, companies such as:
- Many cash
- Less debt
- High capital ratio
- Stable sales cash flow
On the other hand, companies with strong debt dependency tend to suffer from increased interest rates and depression.
In particular, in terms of interest rates, companies with high interest-bearing debt need to be careful.
Why view cash flow
Pay attention to companies that don’t increase cash if they don’t profit.
You may not match your accounting profits and cash you actually enter the company.
First of all, it is easy to understand by looking at the sales cash flow.
| 指標 | See Points |
|---|---|
| Cash Flow | Are you making cash in the business? |
| Investment cash flow | Growing investment |
| Financial Cash Flow | Debt, repayment, dividend movement |
A company that continues to produce cash in the business is easy to see by long-term investment.
Common beginner misunderstandings
| misunderstanding | In fact |
|---|---|
| See only sales growth | Profits and financial matters |
| PER low = discount | There are companies that stop growth and business performance deterioration |
| For famous companies | Stock price may be too high |
| Safety if profit is out | Cash may not increase |
| If the dividend is higher | Reduced risk |
Weakness of Fundamentals Analysis
Fundamentals analysis is not universal.
There is also demerit.
- Time to analyze
- Future prediction is required
- You may lose to the market
- It may not be suitable for short-term trading
- The premise may change in financial results announcement
In the short term, even good companies may fall stock price.
つまり、
The stock raised with a good company does not match perfectly
That is important.
Good compatibility with long-term perspective
Fundamentals analysis is a good analytical method for long-term investment.
However, corporate value is reflected in the short term and long term.
In practice, it will change greatly by just customizing the following confirmation.
- Check sales every year
- 利益 Profit Trends
- financial safety
- Check the cash flow
- See the differences between upcoming forecasts and results
First,
How to make and profit
It is good to start with understanding.
Beginner checklist
When you look at individual shares, you can easily organize the following.
| 項目 | Check |
|---|---|
| Business | What are you earning? |
| Sales | Growing |
| Operating income | Is it possible to earn in business? |
| PER | Don’t expect too high |
| 財務 | Is the debt too heavy? |
| Cash Flow | Are you making cash? |
| Risks | What's weak when it is broken? |
Even if you check this check, it will be easier to reduce the failure to buy only the topic.
- How the fundamentals analysis sees the power of the company
- Sales / Profit / PER
- Important financial safety
- Check cash flow
- Not judged by PER
- Good compatibility with long-term investment
It is important to see not only the popularity of stock prices but how companies can earn and how much they can continue.