Fundamental Analysis Basics
Fundamental Analysis is the process of investing by examining the underlying financial data of a company. There are many pieces to the puzzle including SEC filings, company reports, industry group comparisons and analyst projections.
Average Volume refers to average daily volume and is used as a measure of the liquidity that can be expected in the market and a measure of the strength that a particular price movement exhibits.
Book Value is an accounting term for the difference between a company's assets and liabilities.
Cash simply refers to cash on hand and is used to evaluate the financial strength of a company and more subjectively its attractiveness as a possible acquisition target.
EPS earnings per share is one of the most basic elements of value oriented analysis.
Float refers to the number of available shares to the public. A lower float tends to make a stock more volatile.
Insider Activity is a gauge of sentiment within a company. Value investors take insider buying as a sign of strength and belief in a company's prospects.
Institutional Holdings give a measure of the strength of the support that a company will enjoy and is a gauge of sentiment within the financial industry.
Market Value or Capitalization is simply the number of outstanding shares multiplied by the current share price.
Outstanding Shares are the number of authorized shares that are held by investors, company officers and employees. Does not include shares in the company treasury.
P/B or Price to Book is the book value divided by the number of outstanding shares which yields this ratio.
P/E or Price to Earnings indicates the relationship of the company's earnings to it's share price so that they can be compared to other companies in the same industry.
PEG Ratio or Price/Earnings to Growth is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company's expected growth.
P/S or Price to Sales is a more forward-looking ratio to value a company, and is currently accepted as a more accurate way to value Internet and technology companies that are not yet showing a profit but may have promising futures.