Fundamental Analysis

What is Fundamental Analysis?

Measuring the True Value Beneath the Price

Fundamental Analysis (FA) is the method of evaluating a company’s intrinsic value by analyzing its financial statements, industry trends, competitive positioning, and macroeconomic factors.

Unlike Technical or Sentiment Analysis, which focus on price movement and market mood, FA is about answering one core question:

“Is this company worth more or less than its current stock price?”

LotusBee’s Take

At LotusBee, we see Fundamental Analysis as the bedrock of smart investing. It’s your long-term compass—guiding decisions beyond short-term noise.

Whether you’re value-hunting, building a dividend portfolio, or evaluating growth names, FA ensures you’re grounded in real numbers, not hype.

And when you combine FA with Technical and Sentiment Analysis—you get a full 360° market view.

Why Fundamental Analysis Matters

Investors use FA to separate hype from value. It’s especially crucial for long-term strategies, helping you identify undervalued gems or avoid overhyped traps.

Key benefits:

  • Valuation Clarity: Know what you’re paying for and why.
  • Investment Quality: Identify companies with strong balance sheets and sustainable growth.
  • Macro Alignment: Understand how economic trends impact earnings, costs, and demand.

Key Metrics & KPIs in Fundamental Analysis

Here are some of the most essential indicators for evaluating a stock fundamentally:

1. Earnings Per Share (EPS):

  • Measures profitability per share.
  • Higher EPS generally = stronger performance.

2. Price-to-Earnings Ratio (P/E):

  • Compares stock price to earnings.
  • High P/E = potentially overvalued; Low P/E = possibly undervalued (relative to peers/sector).

3. Revenue Growth:

  • Tracks top-line expansion over time.
  • Consistent growth signals healthy business operations.

4. Return on Equity (ROE):

  • Measures how effectively a company uses shareholder capital to generate profit.

5. Debt-to-Equity Ratio (D/E):

  • Indicates financial leverage.
  • High D/E = more risk; Low D/E = more conservative balance sheet.

6. Free Cash Flow (FCF):

  • Cash a company generates after capital expenditures—critical for sustainability and dividends.