facebookWhat does "check the fundamentals of a company" means when evaluating a company to invest in? - Seedly

What does "check the fundamentals of a company" means when evaluating a company to invest in?

I've been reading some articles about investing and I am not sure what it really means...

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Chan Ze Ming

27 Oct 2020

Accountancy and Finance Student at Nanyang Polytechnic

Hi!
Imo, basically without factoring in the current price, you solely based your estimation on the company itself, both micro and macro. Eg, There was a recent example, Sri trang Agro / Sgx:nc2, they had a fantastic result, good subsidiary ipo (subsidiary price>parent), good potential due to demand of rubber gloves (due to covid), recovery of rubber (due to more demand) and a good balance sheet.
However, to just solely invest based on the fundamentals is bad as well because of technical analysis (general downtrend, shortist (this happened to nc2), bearish) and many people use indicators for buying and selling as well, so you got to know a few to know the possible trend.

It is researching and analysing information on the company and the industry. This can include:

  • Management and reputation

  • Competitive conditions and prospects

  • Possible changes in volume, price and costs

  • Market factors - technical, manipulative, psychological

  • Intrinsic value factors - earnings, dividends, assets, capital structure, terms of issue, others

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