This document discusses a study of factors that influence analysts' decisions when conducting fundamental analysis of stocks on the Tehran Stock Exchange. It begins by providing background on fundamental analysis and previous related research. The study aims to identify which of three factors - economy/market, industry, or firm-related - have the greatest influence on analysts' decisions. It uses a questionnaire to collect data from analysts and SPSS software to analyze the results. The results indicate that firm-related factors like earnings per share, profit margins, and price-to-earnings ratios have the highest importance, followed by economy/market factors and then industry factors.
Factors affecting stock market prices in amman stock exchangeAlexander Decker
This document summarizes a study that examined factors affecting stock market prices on the Amman Stock Exchange. The study used surveys to collect data on how internal factors like dividend policy, firm size, management quality, and financial situation impact stock prices. It found that inflation had the most impact on prices, while the nature of the firm's business had the least. The study recommended that companies get more involved in drafting laws and regulations to strengthen their role in the stock market.
METHODOLOGICAL APPROACHES TO ANALYSIS OF CORRELATION RELATIONSHIPS BASED ON E...IAEME Publication
Clear economic activity management is one of the most essential aspects of any
company’s stable financial standing under contemporary conditions. Economic
activity management at a company is impossible without an in-depth and detailed
study of all the processes related to it. Analytics is of paramount importance for
managing a company’s settlement system.
This article is devoted to analyzing of correlations/correlation relationships
analysis methods based on economic statistics. The correlation analysis is used to
measure the strength of a relationship between variables and to evaluate the factors
that affect the result attribute the most, which distinguishes it from regression analysis
used to select the relationship form, model type, to determine rated values of the result
attribute. The regression and correlation analysis methods are used holistically. Pair
correlation aimed at studying correlations of a factor attribute and a result attribute
can be regarded as the most developed theoretically and used in practice. Such study
is called single-factor correlation and regression analysis used as the basis for
studying multi-factor stochastic relationships. The article also examines the approach
Learn Fundamental analysis of stocks discover the easy and proven way of market analysis, financial ratios, share price, stock price, growth rate for long term and short term.
This document discusses fundamental analysis techniques for evaluating stocks. It covers analyzing macroeconomic factors, industries, and individual companies. Fundamental analysis involves forecasting earnings, cash flows, and dividends to determine a stock's intrinsic value. It breaks down as 30-35% economic analysis, 15-20% industry analysis, and 30-35% company analysis. Key aspects covered include Porter's five forces model, industry life cycles, quantitative ratios like P/E, and qualitative factors. The overall aim is to understand factors that affect stock prices and identify undervalued stocks.
Determinants of Share Prices of listed Commercial Banks in Pakistaniosrjce
The focus of this paper is to identify the determinants of share prices for the listed commercial banks
in Karachi stock exchange over the period 2007-2013. One of the unique features of this paper is to find out the
impact of both internal and external factors on share price. Linear multiple regression analysis is used to
determine whether the selected independent variables have influence on share prices or not. The results indicate
that earning per share has more influence on share prices and it has positive and significant relationship with
share prices, book to market value ratio and interest rate have also significant but negative relation with share
prices while other variables (gross domestic product, price earnings ratio, dividend per share, leverage) have
no relationship with share prices
This document describes a study that uses an integrated TOPSIS-DEA approach to rank cement companies listed on the Tehran Stock Exchange. The study evaluates 28 cement companies from 2006-2012 using both qualitative and quantitative data. Financial ratios and other data are used as inputs and outputs in the TOPSIS-DEA model. The hybrid model aims to provide a more accurate ranking by combining the advantages of the TOPSIS and DEA methods. When the results were presented to stock market experts, most felt the integrated approach provided a better ranking of company performance than quantitative or qualitative approaches alone.
- Fundamental analysis is the evaluation of a company or asset based on its financial statements and overall economic factors to determine its intrinsic value. It involves examining historical and present data along with financial forecasts to estimate future performance.
- There are two main types of fundamental analysis: macro analysis, which looks at broader economic and industry factors, and micro analysis, which analyzes individual companies and stocks.
- The fundamental analysis process typically involves a top-down approach starting with macro analysis of the overall economy and industry, then micro analysis of specific companies within industries. The goal is to identify underpriced or overpriced stocks based on their estimated intrinsic value.
Factors affecting stock market prices in amman stock exchangeAlexander Decker
This document summarizes a study that examined factors affecting stock market prices on the Amman Stock Exchange. The study used surveys to collect data on how internal factors like dividend policy, firm size, management quality, and financial situation impact stock prices. It found that inflation had the most impact on prices, while the nature of the firm's business had the least. The study recommended that companies get more involved in drafting laws and regulations to strengthen their role in the stock market.
METHODOLOGICAL APPROACHES TO ANALYSIS OF CORRELATION RELATIONSHIPS BASED ON E...IAEME Publication
Clear economic activity management is one of the most essential aspects of any
company’s stable financial standing under contemporary conditions. Economic
activity management at a company is impossible without an in-depth and detailed
study of all the processes related to it. Analytics is of paramount importance for
managing a company’s settlement system.
This article is devoted to analyzing of correlations/correlation relationships
analysis methods based on economic statistics. The correlation analysis is used to
measure the strength of a relationship between variables and to evaluate the factors
that affect the result attribute the most, which distinguishes it from regression analysis
used to select the relationship form, model type, to determine rated values of the result
attribute. The regression and correlation analysis methods are used holistically. Pair
correlation aimed at studying correlations of a factor attribute and a result attribute
can be regarded as the most developed theoretically and used in practice. Such study
is called single-factor correlation and regression analysis used as the basis for
studying multi-factor stochastic relationships. The article also examines the approach
Learn Fundamental analysis of stocks discover the easy and proven way of market analysis, financial ratios, share price, stock price, growth rate for long term and short term.
This document discusses fundamental analysis techniques for evaluating stocks. It covers analyzing macroeconomic factors, industries, and individual companies. Fundamental analysis involves forecasting earnings, cash flows, and dividends to determine a stock's intrinsic value. It breaks down as 30-35% economic analysis, 15-20% industry analysis, and 30-35% company analysis. Key aspects covered include Porter's five forces model, industry life cycles, quantitative ratios like P/E, and qualitative factors. The overall aim is to understand factors that affect stock prices and identify undervalued stocks.
Determinants of Share Prices of listed Commercial Banks in Pakistaniosrjce
The focus of this paper is to identify the determinants of share prices for the listed commercial banks
in Karachi stock exchange over the period 2007-2013. One of the unique features of this paper is to find out the
impact of both internal and external factors on share price. Linear multiple regression analysis is used to
determine whether the selected independent variables have influence on share prices or not. The results indicate
that earning per share has more influence on share prices and it has positive and significant relationship with
share prices, book to market value ratio and interest rate have also significant but negative relation with share
prices while other variables (gross domestic product, price earnings ratio, dividend per share, leverage) have
no relationship with share prices
This document describes a study that uses an integrated TOPSIS-DEA approach to rank cement companies listed on the Tehran Stock Exchange. The study evaluates 28 cement companies from 2006-2012 using both qualitative and quantitative data. Financial ratios and other data are used as inputs and outputs in the TOPSIS-DEA model. The hybrid model aims to provide a more accurate ranking by combining the advantages of the TOPSIS and DEA methods. When the results were presented to stock market experts, most felt the integrated approach provided a better ranking of company performance than quantitative or qualitative approaches alone.
- Fundamental analysis is the evaluation of a company or asset based on its financial statements and overall economic factors to determine its intrinsic value. It involves examining historical and present data along with financial forecasts to estimate future performance.
- There are two main types of fundamental analysis: macro analysis, which looks at broader economic and industry factors, and micro analysis, which analyzes individual companies and stocks.
- The fundamental analysis process typically involves a top-down approach starting with macro analysis of the overall economy and industry, then micro analysis of specific companies within industries. The goal is to identify underpriced or overpriced stocks based on their estimated intrinsic value.
This document discusses fundamental analysis and technical analysis techniques for evaluating stocks. Fundamental analysis examines macroeconomic conditions, industry trends, and company financials to determine a stock's intrinsic value and predict future performance. Technical analysis focuses on analyzing stock price movements and market indicators to identify trends. Key aspects of fundamental analysis covered include economic analysis, industry life cycles, and quantitative/qualitative company analysis using metrics like earnings, cash flows, and management quality.
This document provides an overview of fundamental analysis tools and processes for equity research and analysis of the steel industry. It discusses fundamental analysis, the fundamental analysis process of gathering data, building models, analyzing data, determining business outlook and value, and developing recommendations. It then provides a case study analysis of Bhushan Steel Ltd, including details of the company, financials, valuation, and conclusion that the analyst would hold the stock.
Movement of Share Prices and Sectoral Analysis: A Reflection Through Interact...Waqas Tariq
Interaction in graphs gives the user with an advantage to analyze the data in greater depth. With the help of interactive graphics users can get better insight of the data in comparison to the static graphical tools. This paper introduces an interactive graphical tool consisting of two graphs, a line diagram complemented by a boxplot. The line diagram helps to understand how successive values of a variable are related to time and box plot can help the visual comparison of several such variables. Here the line diagram is used to visualize share prices of a company corresponding to a number of days and the boxplot displays the position of the Share price of all companies in a particular sector. An investor in share market needs to consider a number of factors before making any decision about investment. Some of the factors influencing the decision are the performance of the particular security in recent past, its position in terms of share price in its own sector. The graphical technique used in this software tool shall be helpful while making investment decision.
1) The document discusses a study on the effect of fundamental factors (sales growth, sales to current assets, and retained earnings to total assets) on stock prices of manufacturing companies in the consumer goods industry on the Indonesia Stock Exchange from 2012-2014.
2) A literature review is presented on capital markets, stocks, and the three fundamental factors being examined. Conceptual frameworks are developed showing the hypothesized relationships between each fundamental factor and stock price.
3) Hypotheses are presented that each fundamental factor individually, and all three factors together, will have an effect on stock prices. The study uses a sample of 18 consumer goods manufacturing companies to test these hypotheses through multiple linear regression analysis.
This document discusses fundamental analysis, which uses financial and economic analysis to predict stock price movements. It examines both macroeconomic factors like the economy and industry-specific factors, as well as individual company performance. Fundamental analysis seeks to determine a stock's intrinsic value based on its current and future earnings capacity. By identifying stocks trading below their intrinsic value, investors can purchase underpriced stocks. The document outlines top-down and bottom-up approaches to analysis, and describes the steps of fundamental analysis as evaluating the economy, industry, and individual companies.
This document is a project report submitted by Rajat Jain for a post graduate diploma in management. The report focuses on conducting fundamental analysis of securities to suggest equity investments. It includes declarations, acknowledgements, an introduction on fundamental analysis and objectives. It discusses analyzing the economy, industry and companies. It also covers tools for fundamental analysis and profiles India Infoline, Tata Steel, Wipro and Sun Pharma to analyze their sectors, financials and make investment interpretations. The report aims to understand company performance, suggest investment opportunities and draw conclusions on the analysis.
Impact of profitability, bank and macroeconomic factors on the market capital...inventionjournals
Panel data has been collected for 44 Middle Eastern banks that are operated during 2005 to 2014 in different Middle Eastern countries. Secondary data has been collected primarily through the DataStream database. The study is conducted to investigate the impact of profitability, bank and macroeconomic factors on the market capitalization of the Middle Eastern banks. Results of Hausman test have explained that fixed effect model is appropriate for the analysis. The result of multiple regression have shown that market capitalization has positive relationship with ROI while negative relationship with credit risk, inflation, and year dummy for the Middle Eastern banks. Furthermore, no relationship has been observed between market capitalization and the ROA, ROE, growth and exchange rate for the Middle Eastern banks.
ENHANCED DECISION SUPPORT SYSTEM FOR PORTFOLIO MANAGEMENT USING FINANCIAL IND...ijbiss
In many cases, financial indicators are used for market analysis and to forecast the future of stock prices.
Due to the high complexity of the stock market, determining which indicators should be used and the
reliability of their outcomes have always been a challenge. In this article, a hybrid approach in the form of
a decision support system is being introduced that offers the best suggestions in buying and selling stocks.
This system will help an investor to identify the best portfolio of stocks using a series of financial
indicators. These indices act as a model that forecast the future price of a stock by examining its activities
and status in the past. Therefore, using a combination of the indices enables us to make decisions with
more certainty. Proficiency of this system has been evaluated through the collection of data from the stock
market in Iran from 2001 through 2011. The results show that the use of indices and their combination
have led to the decision support system to produce suggestions with very high precisions.
Determinants of equity share prices of the listed company in dhaka stock exch...MD. Walid Hossain
This is the finance academic project report.This report prepare by MD. WALID HOSSAIN, Patuakhali science and technology University, Faculty of business administration and management. i think that is helpful for business studies students.
This document provides information on fundamental analysis and technical analysis. Fundamental analysis examines quantitative and qualitative factors that may impact a company, industry or economy to assess a stock's intrinsic value. Technical analysis uses past stock price and volume data to predict future price movements. Some key differences are that fundamental analysis focuses on long-term investing based on financials while technical analysis focuses on short-term trading based on price trends and momentum.
The document discusses the process of fundamental analysis that equity research analysts use to value stocks. It involves gathering data on the economy, industry, and specific companies, building models to analyze the data and project financials. Analysts determine the business outlook and stock value using methods like discounted cash flow analysis. Based on their research and investment style, analysts will recommend buying, selling, or holding a stock. The career requires strong quantitative skills, as well as excellent communication skills to present recommendations.
This document discusses the concepts and process of fundamental analysis for making investment decisions. It explains that fundamental analysis examines the intrinsic value of a company by analyzing the economy, industry, and company. The analysis involves 3 phases - evaluating the economy, industry life cycle stages (pioneering, expansion, stagnation), and company financial ratios to determine if the stock is under or overvalued compared to market price. Making investment decisions requires understanding these fundamental analysis concepts.
This document provides an overview of industry analysis. It defines industry analysis as evaluating the strengths and weaknesses of particular industries. It discusses industry life cycles, characteristics such as demand/supply gaps and cost structures. Methods of industry forecasting are also summarized, including cumulative methods like surveys and correlation/regression analysis, as well as time series analysis involving trends, cycles, seasons and erratic events. The document aims to inform investors' understanding of how industry factors influence company performance.
The document discusses investment process and approaches. It describes the 5 stages of the investment process: 1) framing an investment policy, 2) security analysis, 3) valuation, 4) portfolio construction, and 5) portfolio evaluation. It then discusses the 3 main approaches to investment: 1) fundamental analysis which examines economic, industry and company factors, 2) technical analysis which analyzes past stock price and volume trends, and 3) the efficient market hypothesis which states stock prices reflect all available information and follow random patterns.
Strategic Planning and Environmental MonitoringJJAnthony
This document discusses strategic planning and environmental monitoring. It provides an overview of the strategic planning process and different models for it. Environmental monitoring is defined as tracking external factors that could impact an organization. Key aspects discussed include the types of information to monitor in the macro environment, industry, competitive, and internal environments. An approach using a Strategic Information Scanning System is presented for organizing environmental data collection and integration into strategic planning. Broad organizational involvement in strategic planning and continuous application of the plan are emphasized.
Fundamental analysis involves examining qualitative and quantitative factors related to a security to determine its intrinsic value. This includes analyzing macroeconomic factors like the overall economy and industry conditions, as well as company-specific factors like financial statements and management. There are two approaches to fundamental analysis: economy analysis which focuses on outputs like GDP, unemployment, and inflation; and industry analysis which evaluates demand, supply, and competitiveness. Company analysis delves into the balance sheet, financial position, products/services, and uses financial ratios to evaluate profitability, liquidity, activity, debt, market performance, and capital budgeting. Fundamental analysis provides valuable insights but should be approached cautiously given potential biases.
The document discusses company analysis and stock valuation. It provides guidance on analyzing a company's competitive strategies, growth potential, management quality, and financials to estimate intrinsic value. Key steps include conducting a SWOT analysis, comparing intrinsic value to market price, and monitoring assumptions to determine when to sell. The overall aim is to identify undervalued stocks by focusing on long-term prospects and downside protection.
Mean
4.512
4.421
4.103
4.324
3.856
3.929
t
11.324
10.456
5.833
8.456
3.259
4.455
df
72
72
72
72
72
72
Sig
.000
.000
.000
.000
.002
.000
The study examined factors that influence analysts' decisions in the Tehran Stock Exchange using a fundamental analysis approach. It analyzed factors at the economy/market, industry, and firm levels. Survey results from 73 analysts found that firm-level factors like actual EPS, estimated EPS, profit margin
Dr. K. Ravichandran is an assistant professor in the Finance Department at King Saud University's College of Business Administration. He teaches the course Advanced Corporate Finance to third year students. The course covers topics like cost of capital, capital structure, dividend policy, financial planning, cash management, inventory management, and working capital management. The document provides Dr. Ravichandran's contact information, the course objectives, topics to be covered in each session, and references.
This document discusses fundamental analysis and technical analysis techniques for evaluating stocks. Fundamental analysis examines macroeconomic conditions, industry trends, and company financials to determine a stock's intrinsic value and predict future performance. Technical analysis focuses on analyzing stock price movements and market indicators to identify trends. Key aspects of fundamental analysis covered include economic analysis, industry life cycles, and quantitative/qualitative company analysis using metrics like earnings, cash flows, and management quality.
This document provides an overview of fundamental analysis tools and processes for equity research and analysis of the steel industry. It discusses fundamental analysis, the fundamental analysis process of gathering data, building models, analyzing data, determining business outlook and value, and developing recommendations. It then provides a case study analysis of Bhushan Steel Ltd, including details of the company, financials, valuation, and conclusion that the analyst would hold the stock.
Movement of Share Prices and Sectoral Analysis: A Reflection Through Interact...Waqas Tariq
Interaction in graphs gives the user with an advantage to analyze the data in greater depth. With the help of interactive graphics users can get better insight of the data in comparison to the static graphical tools. This paper introduces an interactive graphical tool consisting of two graphs, a line diagram complemented by a boxplot. The line diagram helps to understand how successive values of a variable are related to time and box plot can help the visual comparison of several such variables. Here the line diagram is used to visualize share prices of a company corresponding to a number of days and the boxplot displays the position of the Share price of all companies in a particular sector. An investor in share market needs to consider a number of factors before making any decision about investment. Some of the factors influencing the decision are the performance of the particular security in recent past, its position in terms of share price in its own sector. The graphical technique used in this software tool shall be helpful while making investment decision.
1) The document discusses a study on the effect of fundamental factors (sales growth, sales to current assets, and retained earnings to total assets) on stock prices of manufacturing companies in the consumer goods industry on the Indonesia Stock Exchange from 2012-2014.
2) A literature review is presented on capital markets, stocks, and the three fundamental factors being examined. Conceptual frameworks are developed showing the hypothesized relationships between each fundamental factor and stock price.
3) Hypotheses are presented that each fundamental factor individually, and all three factors together, will have an effect on stock prices. The study uses a sample of 18 consumer goods manufacturing companies to test these hypotheses through multiple linear regression analysis.
This document discusses fundamental analysis, which uses financial and economic analysis to predict stock price movements. It examines both macroeconomic factors like the economy and industry-specific factors, as well as individual company performance. Fundamental analysis seeks to determine a stock's intrinsic value based on its current and future earnings capacity. By identifying stocks trading below their intrinsic value, investors can purchase underpriced stocks. The document outlines top-down and bottom-up approaches to analysis, and describes the steps of fundamental analysis as evaluating the economy, industry, and individual companies.
This document is a project report submitted by Rajat Jain for a post graduate diploma in management. The report focuses on conducting fundamental analysis of securities to suggest equity investments. It includes declarations, acknowledgements, an introduction on fundamental analysis and objectives. It discusses analyzing the economy, industry and companies. It also covers tools for fundamental analysis and profiles India Infoline, Tata Steel, Wipro and Sun Pharma to analyze their sectors, financials and make investment interpretations. The report aims to understand company performance, suggest investment opportunities and draw conclusions on the analysis.
Impact of profitability, bank and macroeconomic factors on the market capital...inventionjournals
Panel data has been collected for 44 Middle Eastern banks that are operated during 2005 to 2014 in different Middle Eastern countries. Secondary data has been collected primarily through the DataStream database. The study is conducted to investigate the impact of profitability, bank and macroeconomic factors on the market capitalization of the Middle Eastern banks. Results of Hausman test have explained that fixed effect model is appropriate for the analysis. The result of multiple regression have shown that market capitalization has positive relationship with ROI while negative relationship with credit risk, inflation, and year dummy for the Middle Eastern banks. Furthermore, no relationship has been observed between market capitalization and the ROA, ROE, growth and exchange rate for the Middle Eastern banks.
ENHANCED DECISION SUPPORT SYSTEM FOR PORTFOLIO MANAGEMENT USING FINANCIAL IND...ijbiss
In many cases, financial indicators are used for market analysis and to forecast the future of stock prices.
Due to the high complexity of the stock market, determining which indicators should be used and the
reliability of their outcomes have always been a challenge. In this article, a hybrid approach in the form of
a decision support system is being introduced that offers the best suggestions in buying and selling stocks.
This system will help an investor to identify the best portfolio of stocks using a series of financial
indicators. These indices act as a model that forecast the future price of a stock by examining its activities
and status in the past. Therefore, using a combination of the indices enables us to make decisions with
more certainty. Proficiency of this system has been evaluated through the collection of data from the stock
market in Iran from 2001 through 2011. The results show that the use of indices and their combination
have led to the decision support system to produce suggestions with very high precisions.
Determinants of equity share prices of the listed company in dhaka stock exch...MD. Walid Hossain
This is the finance academic project report.This report prepare by MD. WALID HOSSAIN, Patuakhali science and technology University, Faculty of business administration and management. i think that is helpful for business studies students.
This document provides information on fundamental analysis and technical analysis. Fundamental analysis examines quantitative and qualitative factors that may impact a company, industry or economy to assess a stock's intrinsic value. Technical analysis uses past stock price and volume data to predict future price movements. Some key differences are that fundamental analysis focuses on long-term investing based on financials while technical analysis focuses on short-term trading based on price trends and momentum.
The document discusses the process of fundamental analysis that equity research analysts use to value stocks. It involves gathering data on the economy, industry, and specific companies, building models to analyze the data and project financials. Analysts determine the business outlook and stock value using methods like discounted cash flow analysis. Based on their research and investment style, analysts will recommend buying, selling, or holding a stock. The career requires strong quantitative skills, as well as excellent communication skills to present recommendations.
This document discusses the concepts and process of fundamental analysis for making investment decisions. It explains that fundamental analysis examines the intrinsic value of a company by analyzing the economy, industry, and company. The analysis involves 3 phases - evaluating the economy, industry life cycle stages (pioneering, expansion, stagnation), and company financial ratios to determine if the stock is under or overvalued compared to market price. Making investment decisions requires understanding these fundamental analysis concepts.
This document provides an overview of industry analysis. It defines industry analysis as evaluating the strengths and weaknesses of particular industries. It discusses industry life cycles, characteristics such as demand/supply gaps and cost structures. Methods of industry forecasting are also summarized, including cumulative methods like surveys and correlation/regression analysis, as well as time series analysis involving trends, cycles, seasons and erratic events. The document aims to inform investors' understanding of how industry factors influence company performance.
The document discusses investment process and approaches. It describes the 5 stages of the investment process: 1) framing an investment policy, 2) security analysis, 3) valuation, 4) portfolio construction, and 5) portfolio evaluation. It then discusses the 3 main approaches to investment: 1) fundamental analysis which examines economic, industry and company factors, 2) technical analysis which analyzes past stock price and volume trends, and 3) the efficient market hypothesis which states stock prices reflect all available information and follow random patterns.
Strategic Planning and Environmental MonitoringJJAnthony
This document discusses strategic planning and environmental monitoring. It provides an overview of the strategic planning process and different models for it. Environmental monitoring is defined as tracking external factors that could impact an organization. Key aspects discussed include the types of information to monitor in the macro environment, industry, competitive, and internal environments. An approach using a Strategic Information Scanning System is presented for organizing environmental data collection and integration into strategic planning. Broad organizational involvement in strategic planning and continuous application of the plan are emphasized.
Fundamental analysis involves examining qualitative and quantitative factors related to a security to determine its intrinsic value. This includes analyzing macroeconomic factors like the overall economy and industry conditions, as well as company-specific factors like financial statements and management. There are two approaches to fundamental analysis: economy analysis which focuses on outputs like GDP, unemployment, and inflation; and industry analysis which evaluates demand, supply, and competitiveness. Company analysis delves into the balance sheet, financial position, products/services, and uses financial ratios to evaluate profitability, liquidity, activity, debt, market performance, and capital budgeting. Fundamental analysis provides valuable insights but should be approached cautiously given potential biases.
The document discusses company analysis and stock valuation. It provides guidance on analyzing a company's competitive strategies, growth potential, management quality, and financials to estimate intrinsic value. Key steps include conducting a SWOT analysis, comparing intrinsic value to market price, and monitoring assumptions to determine when to sell. The overall aim is to identify undervalued stocks by focusing on long-term prospects and downside protection.
Mean
4.512
4.421
4.103
4.324
3.856
3.929
t
11.324
10.456
5.833
8.456
3.259
4.455
df
72
72
72
72
72
72
Sig
.000
.000
.000
.000
.002
.000
The study examined factors that influence analysts' decisions in the Tehran Stock Exchange using a fundamental analysis approach. It analyzed factors at the economy/market, industry, and firm levels. Survey results from 73 analysts found that firm-level factors like actual EPS, estimated EPS, profit margin
Dr. K. Ravichandran is an assistant professor in the Finance Department at King Saud University's College of Business Administration. He teaches the course Advanced Corporate Finance to third year students. The course covers topics like cost of capital, capital structure, dividend policy, financial planning, cash management, inventory management, and working capital management. The document provides Dr. Ravichandran's contact information, the course objectives, topics to be covered in each session, and references.
- Economists failed to predict the financial crisis because they embraced oversimplified models that ignored irrational behavior and market imperfections. These models portrayed the economy as a perfectly efficient system guided by rational actors.
- Prior to the crisis, many economists argued markets were inherently stable and self-correcting. They did not consider the possibility of a total collapse. The crisis exposed major faults in economic theories that had been widely accepted.
- Moving forward, economists will need to develop more realistic models that acknowledge irrational behavior, imperfect markets, and the possibility of unpredictable crashes occurring despite a central bank's efforts to prevent them. Theories will also need to incorporate more "messiness" rather than aiming for a single elegant theory.
This case study describes Allen, a 24-year-old senior college student seeking counseling. Assessments using the Myers-Briggs Type Indicator and Self-Directed Search were administered. The MBTI identified Allen as an ENTP personality type who dislikes rules and enjoys discussion. The SDS results did not match any marketing occupations and identified engineering fields as potential alternatives. The counselor's treatment plan is to monitor Allen's academic progress, help him combine his marketing major with his personality assessment results, and explore different career options.
The document discusses security analysis of selected power sector securities listed on the Bombay Stock Exchange. It aims to conduct fundamental and technical analysis of leading power sector companies. The study selects six companies - NTPC, RELIANCE, POWERGRID, NHPC, TATAPOWER and ADANI POWER - to analyze their financial strength and future investment prospects through fundamental ratios and technical tools like bar charts and moving averages. The analysis seeks to evaluate company performance, stock movement, and risk-return to identify companies that ensure maximum return with minimum risk for investors in the power sector.
This document discusses various aspects of fundamental analysis including:
1. Fundamental analysis examines economic and financial factors that may affect a security's value, such as macroeconomic conditions and company management effectiveness.
2. Fundamental factors can be quantitative (numbers-based like financial statements) or qualitative (less tangible like management quality).
3. Economic analysis studies how key economic indicators like GDP, inflation, and interest rates impact an organization or industry.
4. Industry analysis identifies growing industries and evaluates industry life cycle stages from innovation to decline.
5. Company analysis examines individual companies' non-financial factors like history and technology as well as financial metrics like equity, sales, profits, and ratios.
The focus of this research is to explain whether investors prefer technical or fundamental analysis to analyze their investment options and to analyze factors influencing the selection of that investment analysis method. The research uses questionnaire with 125 participants. Six independent variables used to explain the choice of investment analysis method, namely investor’s education, investor’s experience, information accessibility by the investor, investor's time the horizon, trading activity frequency, and investor’s perception toward the disclosure done by the corporation. The result showed that Indonesian investors prefer technical analysis. The influencing factors that significantly the selection of analysis method are investor’s experience and investor’s time horizon.
Technical Analysis Vs Fundamental Analysis.pdfNazim Khan
Technical analysis and fundamental analysis are two primary methods used by investors and traders to evaluate and make decisions in the financial markets. While both approaches aim to analyze and predict market movements, they differ significantly in their methodologies and focus. In this post, we will look at the basic differences between technical and fundamental analysis, their strengths and weaknesses, and how they can be used to analyse market movement of any company using Technical & Fundamental analysis.
1. Introduction
In the stock markets, traders use various trading strategies and makes proper research to make informed decisions before buying, selling, or holding assets. Two prominent methods used for analysis are technical analysis and fundamental analysis. Each approach offers a unique perspective on market behaviour and helps investors make decisions based on different sets of information.
2. Understanding Technical Analysis
The Basics of Technical Analysis
Technical analysis focuses on studying historical market data, such as price and volume, to identify patterns and trends that can help predict future price movements. It is based on the belief that historical price data can provide insights into the psychology of market participants and that these patterns tend to repeat over time.
Common Tools and Indicators in Technical Analysis
Technical analysts use a wide range of tools and indicators to analyze price charts and identify patterns. Some commonly used tools include moving averages, trendlines, support and resistance levels, and oscillators like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD). These tools help in generating signals for buying or selling securities based on specific conditions or patterns observed on price charts.
Limitations of Technical Analysis
Technical analysis has certain limitations that investors should be aware of. Firstly, it completely relies on historical price data of the companies, and it does not take into account the underlying factors that may affect the value of an asset of the company. Additionally, technical analysis is based on the assumption that market participants behave in predictable patterns, which may not always hold true. Lastly, interpreting and analyzing charts and indicators require skill and experience, as different analysts may interpret the same data differently.
3. Understanding Fundamental Analysis
The Basics of Fundamental Analysis
Fundamental analysis aims to evaluate the intrinsic value of an asset by analyzing various economic, financial, and qualitative factors that may impact its future performance. It involves assessing the financial health of a company, analyzing industry trends, evaluating macroeconomic indicators, and considering management quality, among other factors.
Key Factors Analyzed in Fundamental Analysis
Fundamental analysts examine a wide range of factors to assess the value of an asset. These include revenue and earnings
This document discusses fundamental analysis, which examines economic, industry, and company factors to evaluate a security's intrinsic value and determine if it is under or overpriced. It describes the three phases of fundamental analysis as evaluating the macroeconomic environment, industry prospects, and a company's projected performance. The goals are to predict market movements, identify undervalued securities, and time investments correctly based on a thorough understanding of economic trends, industry drivers, and business fundamentals. Strengths of fundamental analysis include analyzing long-term trends, spotting good value, developing business acumen, understanding key value drivers, and properly categorizing stocks within their industry groups.
Analysis of Fundamental Factors, Foreign Exchange and Interest Rate on Stock ...inventionjournals
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Fundamental analysis is a logical and systematic approach to evaluating securities by examining related economic, financial, and other qualitative and quantitative factors. It involves analyzing macroeconomic factors like GDP growth, as well as industry conditions and company-specific factors to estimate a security's intrinsic value and forecast future performance. The goal is to identify securities that are underpriced (presenting opportunities) or overpriced (presenting risks). Fundamental analysis uses various techniques including demand-supply analysis, price elasticity, balance sheets, and regression analysis to value assets and predict price movements.
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2. 78 European Journal of Economics, Finance and Administrative Sciences - Issue 44 (2012)
Technical analysis method is a way to forecast security price fluctuations and to find share
price patterns while fundamental analysis method assumes that each security has an intrinsic value
based on investor’s estimations. Such value is a function of company’s fundamental variables
combined to create expected return and its related risk (Jonz, 2002).
Fundamental analysts study such issue as incomes, audited balance sheets, dividend reports,
managerial capabilities and competitive status and then compute the intrinsic value of each share based
on future inflow cash forecasts (Abdolahzadeh, 2002). In countries like Iran that lack an efficient
capital market, there is a remarkable difference between securities market and intrinsic values; so it is
better foe analysts to use fundamental analysis to evaluate stocks.
Regarding the role played by this approach in stock analyses by analysts, we plan to study the
factors used by analysts in this approach as well as the importance rate of such factors. So our purpose
in this research including: 1.Identifying the method of analysts’ decisions in stock transactions
2.Studying the factors considered by analysts in fundamental analysis in terms of importance.
2. Previous Research
Since there a few domestic researches on affecting factors on investment decisions and foreign studies
are more focused on the ways of using technical and fundamental analyses rather than affecting factors
on investment decisions, research background is as follow:
In 2011, Davari et al conducted a research on affecting factors on fundamental analysis by
investors in Isfahan Regional Exchange and concluded that macro economic factors have less impact
on investors’ decisions and among company related factors, competitive status, profitability analysis
and financial analysis impact on investors’ decisions.
In a research by Tavakoli Mohammadi and Ghazizadeh (2009), the behavior of investment
managers and financial analysts on forecasting the market and stock selection in TSE was studied and
they concluded that analysts use stock selection traditional methods (technical and fundamental
analyses) more than new methods (portfolio analysis technique).
In 2004, in his research on identifying the affecting factors on stock selection in TSE (cement
industry) by using MADM approach, Hadavinejad rated shareholders’ criteria in evaluating and
selecting stocks. His findings show that the most important affecting factors are economic policies and
measures, financial ratios on stock dividends and R & D plans.
In a research by Aghaie and Mokhtarian in 2004, affecting factors on investors’ decision
making in TSE were studied. The findings show that financial criteria including dividends and the
profit of each share are too important for investors but their importance is less than price inflations and
stock price trends in exchange market.
In a research by Stanly Block in 1999 on affecting variables on analysts’ decisions in USA, it
was recognized that the importance of stock dividend and relevant cash flows are more than book value
and divided profit.
In 1994, Negy and Obenberger distributed a list containing 34 affecting variables on decision
making among the shareholders of 500 companies randomly. The findings show a combination of
financial and nonfinancial factors. According to these findings, one can conclude that investors’
decisions include a continuum of financial and nonfinancial items that each investor may consider a
different importance for each factor.
In their research on technical and fundamental analyses in 2007, Menkhoff and Taylor found
that (1) almost all market scholars use technical analysis, (2) most stock market scholars use a
combination of both analyses and (3) in a short term interval, technical analysis is more important than
fundamental one.
In 1998, Hon Lui and David Mole conducted a research in which the extent of using technical
and fundamental analyses by international market dealers in Hong Kong was studied. The findings
3. 79 European Journal of Economics, Finance and Administrative Sciences - Issue 44 (2012)
show that dealers rely upon both technical and fundamental analyses but in shorter intervals, technical
analysis is more fruitful than fundamental analysis in forecasting the references and procedures.
3. Research Questions
1. Which factors namely economy/market, industry and firm have the highest importance in
analysts’ fundamental approach?
2. Among above three factors, which one has the highest importance?
4. Fundamental Analysis
Fundamental analysis is to evaluate current information in financial statements, industrial reports and
economic factors to determine company’s intrinsic value. Fundamentalists try to forecast changes in
stock future prices by studying factors related to stock values in the market. These factors are divided
into three groups:
• Company’s conditions: incomes, financial power, products, management and workforce
relations
• Industrial conditions: stability and current competitive situation
• Economy/market conditions: economic cycles and Money and Financial Policies of the
country (Raei, 2010).
In fundamental analysis both quantitative tools such as financial ratios from financial
statements and qualitative tools such as managerial policies, marketing strategies and product
innovation are used to determine the intrinsic value of investment tools (Lam, 2003) Fundamental
analysis stands on the assumption that each security (and market in total) has an intrinsic or integer
value based on investor’s estimates. Such value is a function of company’s fundamental variables
combined to create expected return and its related risk. One can estimate intrinsic value by evaluating
fundamental variables of security value determinants. Then, estimated intrinsic value can be compared
to security current price in the market.
Fundamental analysis can be conducted by two top – down and down – top approaches. In top –
down approach, economy/market, industry and firm are analyzed respectively. Economy and market
for securities are analyzed to see whether it is the right time to allocate additional sums to stocks or not.
Then, industries and sections are analyzed to decide which one has the best outlook in future. Finally,
company is analyzed. In down – top approach, investors focus on firm’s pillars or foundations directly.
Analyzing such data as firm’s products, competitive status and financial situation lead to estimate
potential profits and, ultimately, its value in the market. In this approach, it is emphasized on finding
companies with long term growth perspective and on right estimations on profit (Jonz, 2002).
Figure 1 shows the evaluation process of fundamental analysis in top – down approach (Jonz,
2002).
4. 80 European Journal of Economics, Finance and Administrative Sciences - Issue 44 (2012)
Figure 1: Fundamental analysis process (top – down approach)
In technical analysis, the content of information is only price and transaction volume while in
fundamental analysis a wide range of information is used like organizational internal information (EPS,
financial ratios, the rate of utilizing the capacity, developmental plans, possible receivables in the
format of differences, subsidies, etc) and external information (products import/export, customs tariffs,
banking interest rate, inflation, foreign currency rate, political changes, currency incomes, etc)
(Mohammadi, 2004: 102 – 103).
In such analysis, stock intrinsic price is forecasted based on future cash flows of each share
after studying relevant factors. It is expected that stock prices increase and the share are purchased if
stock market price is lower than its intrinsic value and vice versa (Albadvi et al, 2007: 673 – 683).
In present study, our used model is studied among Tehran Stock Exchange analysts. TSE is the
main stock market in Iran and its value is over 124$ billion (www.tsetmc.com).
We use a top – down approach so that macro market/economy factors, industry – related factors
and company –related factors are respectively studied to investigate a fundamental analysis.
5. 81 European Journal of Economics, Finance and Administrative Sciences - Issue 44 (2012)
5. Methodology
5.1. Sampling and Sample Volume
In present study, sample means those analysts who work in capital market to advise and analyze the
market. Since the number of capital market analysts is limited, we used simple random sampling
method for a limited population. Following formula was used to determine the sample volume:
2
2
2
2 2 2
2
N.Z P(1 P)
307.1.96 .0.5(1 0.5)
73
28 (N 1) Z .P(1 P) 0.1 (307 1) 1.96 .0.5(1 0.5)
a
a
n n
−
−
= = =
− + − − + −
n: sample volume
Z: normal distribution standard variable
ε: estimation error
As seen, the sample volume is 73 after inserting the figures into the sample volume. Therefore,
this sample is considered as the final sample since its volume is greater than 30 namely population
distribution is normal. In confidence level 95%, the sample volume should be at least 73 in order to
extend its results to statistical population.
5.2. Data Collection Method
Regarding research goals, affecting factors on decision making were extracted through examining
various resources. They were mitigated by using the opinions of elites and scholars in capital market
and, finally, a questionnaire was devised in two parts. In the first part, all three variables including (1)
economy market macro factors, (2) industry factors and (3) firm factors were divided into several
segments and then their traits and states were questioned. In the second part, the factors are prepared by
using Likert scale. One can answer research questions by analyzing the provided data in this section.
To test research validity, a preliminary questionnaire was prepared and it was amended after
obtaining elites’ opinions.
To test research reliability, Chronbach’s alpha is utilized. By using SPSS software,
Chronbach’s alpha was calculated for research questions which was 85% for a 73-subject sample and
shows the reliability of the questionnaire.
6. Data Analysis
The results of data descriptive analysis on the gender of respondents (figure 2) show that 86% of
respondents are male and 14% are female. It indicates that most analysts in Tehran Stock Exchange are
men.
Figure 2:
6. 82 European Journal of Economics, Finance and Administrative Sciences - Issue 44 (2012)
In the meantime, the results of descriptive analysis on the education of respondents (figure 3)
show that all respondents possess B. A. or M. A. degrees. Most of the respondents have M. A.
Relevant percentages are outlined in below figure.
Figure 3:
Obtained data from the questionnaire were analyzed by SPSS software. The first question is
that “how is the importance of three variables namely (1) economy market macro factors, (2) industry
factors and (3) firm factors for analysts’ decisions. To answer this question, Duncan’s test is used and
the findings are shown in tables 1 and 2.
Table 1:
ANOVA of main factors
Sum of Squares df Mean Square F Sig.
Between Groups 2.094 2 1.047 3.435 .035
Within Groups 43.898 144 .305
Total 45.992 146
Table 2:
Duncan
Main factors N Subset for alpha = 0.05
1 2
Market/economy 73 2.6129
industry 73 2.6342
company 73 3.8705
Sig. .855 1.000
As seen in ANOVA table, it is determined that Sig is less than 0.05 which shows a significant
difference between some factors. Likewise, Duncan table indicates that the importance of company’s
related factors is more than economy/market and industry related factors. There is no significant
difference between economy/market and industry related factors (they have equal importance).
To answer the second question, some tests were conducted on (1) economy market macro
factors, (2) industry factors and (3) firm factors and the results are shown in below tables.
In such tests, H1 means that the average score of respondents in 95% confidence level is > 3
and H0 means that it is ≤ 3.
Table 3 indicates the importance of economy/market factors which includes 6 variables such as
interest rate, governmental monetary policies, governmental laws and regulation, business cycle and
political factors.
7. 83 European Journal of Economics, Finance and Administrative Sciences - Issue 44 (2012)
Table 3:
Components Mean t df Sig
Rate of interest 4.103 5.833 72 .000
Money policy 3.929 4.455 72 .000
Governmental law 2.951 .396 72 .693
Business cycle 2.992 1.567 72 .123
Rate of inflation 2.689 -2.250 72 .028
Political factors 4.500 15.100 72 .000
Obtained significance level for interest rate, governmental monetary policies and political
factors is less than 0.05 and since t is positive, H1 is supported. Regarding governmental laws and
business cycle, H1 is rejected and H0 is supported since their significance level is greater than 0.05.
Regarding the inflation rate, although its significance level is greater than 0.05, H1 is rejected and H0
because that t is negative. Overall, one can conclude that among economy/market variable, three
factors including banking interest rate, monetary policies and political factors with 95% confidence
level impact on analysts’ decisions and other factor have no remarkable impact. As expected, because
of domestic political situation, political factors are considered as the most important macro economic
factors. Their average importance is shown in graph 1.
Graph 1:
The results for industry related factors are outlined in table 4.
Table 4:
Components Mean T df Sig
Price index of industry 2.844 1.720 72 .091
Governmental law 2.789 .872 72 .384
Return of industries 2.821 -1.436 72 .157
Life cycle of industry 2.624 -2.537 72 .041
Competitive situation 2.743 1.029 72 .308
Growth rate of industry 3.856 3.259 72 .002
Developmental project of industry 4.012 5.178 72 .000
Technological change 2.797 1.318 72 .193
Industry’s dependence on foreign exchange 4.471 6.217 72 .000
Obtained significance level for three variables including growth rate of industry, government’s
developmental plans and dependence on foreign exchange rate is less than 0.05 so H1 is supported.
Regarding other variables such as price index of industry, governmental laws, return of industries, life
8. 84 European Journal of Economics, Finance and Administrative Sciences - Issue 44 (2012)
cycle of industry, industry competitive situation and technological changes, H1 is rejected and H0 is
supported. Overall, regarding the impact of industry factors on analysts’ decisions, one can say that
variables like growth index of industry, developmental plans for industries and industry’s dependence
on foreign exchange with 95% confidence level impact on analysts’ decisions and other factor have no
remarkable impact. Their average importance is shown in graph 2.
Graph 2:
The results for company related factors are outlined in table 5.
Table 5:
Components Mean T df Sig
Predicted EPS 4.3276 8.069 72 .000
Real EPS 4.6034 12.984 72 .000
P/E 4.0690 4.549 72 .000
Sale 3.9828 4.234 72 .000
Gross profit 4.1034 6.006 72 .000
ROA 3.9649 4.648 72 .000
Midterm report 3.9649 3.717 72 .000
Profit growth 3.9286 3.774 72 .000
Liquidity rank 2.966 1.409 72 .164
Main stockholder 2.987 1.878 72 .066
Liquidity ratio 2.991 -1.920 72 .060
Competitive situation of company 2.621 .563 72 .576
Transaction volume 2.534 -.157 72 .876
Supply & Demand of stock 3.7368 2.327 72 .024
Profit stability 3.8772 3.759 72 .000
The results of testing company related factors show that significance level for such variables as
predicted EPS, real EPS, sale, P/E, margin profit, ROI, midterm reports, profit growth, supply and
demand of stock and profit stability is less than 0.05 so H0 is rejected and H1 is supported. Regarding
other variables, H1 is rejected and H0 is supported. Therefore, variables like predicted EPS, real EPS,
sale, P/E, margin profit, ROI, midterm reports, profit growth, supply and demand of stock and profit
stability impact on analysts’ decisions and other factor have no remarkable impact. Their average
importance is shown in graph 3.
9. 85 European Journal of Economics, Finance and Administrative Sciences - Issue 44 (2012)
Graph 3:
7. Conclusion
As seen, among three factors analyzed in present study, company related factors have the highest
importance on analysts’ decisions; it shows that analysts consider a special priority for financial
statements and midterm reports. In the meantime, among financial statement elements, real EPS has
the highest importance. On the other hand, the importance of economy/market and industry related
factors have lower importance on analysts’ decisions. Perhaps, the reason is that analysts access to
company information more than other data. Therefore, the findings show that in fundamental analysis,
company related factors have the highest importance followed by economy/market and industry related
factors.
Compared to the findings of present study and another research conducted by Aghaie and
Mokhtarian in 2004, on can conclude that measures used by investors in their decisions are almost in
contrary to measures used by analysts in their decisions. In other words, while investors emphasize
highly on measures like stock price trend and financial statements are less regarded by them, analysts
give the highest importance to company’s financial statements and other factors are less regarded by
them.
Noteworthy, there other factors that can impact on analysts’ decisions not included in our
questionnaire. This was due to the scope of financial discussions and length of factors as well as the
problems of responding. So, it is recommended that other characterizes to be identified and studied by
other researchers.
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