Fundamental analysis involves a top-down study of financial and economic factors to estimate a stock's intrinsic value. This includes analyzing the overall economy, industry, and company-specific factors both quantitatively and qualitatively. Some key aspects examined are macroeconomic indicators, competitive forces within an industry, the industry's life cycle stage and growth drivers, and how these may impact the target company. The goal is to predict how the stock price may change as it moves toward the estimated intrinsic value over time. However, there are big unknowns in the analysis and the intrinsic value estimate may not be accurate.
evaluating a security in an attempt to measure its intrinsic value, by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts study anything that can affect the security's value, including macroeconomic factors such as the overall economy and industry conditions, and microeconomic factors such as financial conditions and company management. The end goal of fundamental analysis is to produce a quantitative value that an investor can compare with a security's current price, thus indicating whether the security is undervalued or overvalued
evaluating a security in an attempt to measure its intrinsic value, by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts study anything that can affect the security's value, including macroeconomic factors such as the overall economy and industry conditions, and microeconomic factors such as financial conditions and company management. The end goal of fundamental analysis is to produce a quantitative value that an investor can compare with a security's current price, thus indicating whether the security is undervalued or overvalued
noorulhadi Lecturer at Govt College of Management Sciences, noorulhadi99@yahoo.com
i have prepared these slides and still using in mylectures, Reference: Portfolio management by S kevin and onlin
The presentation explains that overall fundamental analysis in a company like economic, industry, and company analysis its gives a brief explanation about that.
noorulhadi Lecturer at Govt College of Management Sciences, noorulhadi99@yahoo.com
i have prepared these slides and still using in mylectures, Reference: Portfolio management by S kevin and onlin
The presentation explains that overall fundamental analysis in a company like economic, industry, and company analysis its gives a brief explanation about that.
Factors Influencing Small Business Growthsri24ram2024
In entrepreneurship, the growth of small businesses is shaped by diverse factors. Economic conditions, regulatory environment, market dynamics, financial management, and internal factors like leadership and innovation play pivotal roles. Recognizing and navigating these influences are essential for small business owners seeking sustainable growth in a dynamic business landscape.
In this power point presentation i am discussing about the fundamental and technical analysis done by an investor before making investment in any company.
External Environmental Analysis
Learning Objectives
After reading this chapter, you should be able to:
• Conduct an industry analysis and describe why it is important.
• Conduct a competitive analysis and describe why it is important.
• Conduct a market analysis and describe why it is important.
• Scan the general environment for any changes or trends that might favor or adversely affect a
healthcare organization.
Chapter 4
MicroWorks/iStock/Thinkstock
spa81202_04_c04.indd 109 1/15/14 4:27 PM
CHAPTER 4Section 4.1 Industry Analysis
An analysis of the external environment covers the industry or segment in which the orga-
nization competes, its competitors, markets, and other relevant environmental trends and
changes. As illustrated in Figure 1.1, external analyses are part of the strategic thinking
process. The purpose is to understand how the environment relevant to the organization
is changing and might change in the future—in this sense, “relevant” means anything the
organization might affect or could be affected by. Without such an understanding, doing
strategic planning becomes much more difficult.
4.1 Industry Analysis
An industry analysis is the study of the healthcare industry and the forces that might
be causing it to change. It involves using a number of standard but indispensable tools
that will be discussed in this chapter. Because the ways in which the healthcare industry
changes can dramatically affect the decisions an organization makes, this analysis is a key
element in strategic planning.
The word industry in “industry analysis” can mean a segment of the larger healthcare
industry or the entire industry itself. If a healthcare organization provides services for
homebound patients, for example, for the purposes of doing a strategic analysis it is com-
peting in the home care industry, even though it is really a segment of the healthcare
industry. While HSOs must consider what is happening in the entire healthcare industry
during strategic planning, the in-depth industry analysis focuses on the arena in which
the organization competes. So while discussions in the next section use the broader term
industry analysis, remember that for HSOs this refers to their narrower segment of the
healthcare industry.
One thing to keep in mind when conducting an industry analysis is to write down what
is true for the industry—not for the organization under analysis. Sometimes data on an
industry or industry segment are easy
to obtain because they are regularly
published or because trade groups or
consulting firms keep tabs on certain
statistics. However, in some situa-
tions it may be difficult to get data for
a meaningful analysis.
To minimize errors when using inad-
equate data or relying on one person’s
estimates, it is advisable to assemble
a group of people to share perspec-
tives and use shared estimates in the
analysis. If the group is fairly knowl-
edgeable about the industry in which ...
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2. Fundamental analysis
Cornerstone of investment.
Top to bottom study.
Fundamental analysis is a stock valuation method
that uses financial and economic analysis to
predict the movement of stock prices. The
fundamental information that is analyzed can
include a company's financial reports, and non-
financial information such as estimates of the
growth of demand for products sold by the
company, industry comparisons, and economy-
wide changes, changes in government policies
etc.
3. Intrinsic value…
To a fundamentalist, the market price of a stock tends to
move towards it's “real value” or “intrinsic value”. If the
“intrinsic/real value” of a stock is above the current market
price, the investor would purchase the stock because he
knows that the stock price would rise and move towards its
“intrinsic or real value”
If the intrinsic value of a stock was below the market price,
the investor would sell the stock because he knows that
the stock price is going to fall and come closer to its
intrinsic value.
All this seems simple. Now the next obvious question is
how do you find out what the intrinsic value of a company
is? Once you know this, you will be able to compare this
price to the market price of the company and decide
whether you want to buy it (or sell it if you already own that
stock).
4. Big unknowns
Your estimate of IV( intrinsic value) is not correct.
How long it will take to come to an intrinsic value.
5. Factors to be studied
The various fundamental factors can be grouped
into two categories: quantitative and qualitative.
The financial meaning of these terms isn’t all that
different from their regular definitions. Here is how
the MSN Encarta dictionary defines the terms:
Quantitative – capable of being measured or
expressed in numerical terms.
Qualitative – related to or based on the quality
or character of something, often as opposed to its
size or quantity.
6. Top to bottom analysis
ECONOMY
ANALYSIS
INDUSTRY
ANALYSIS
COMPANY
ANALYSIS
7. ECONOMY ANALYSIS
Types of economy on the basis of control.
Private.
Social.
Mixed.
Types of economy on the basis of exposure to the
world.
Open economy.
Closed economy.
8. Current state of economy.
Agriculture economy.
Industrial performance.
Infrastructure.
Service sector.
Corporate performance.
External demand.
9. Economic indicators.
Leading indicators: A measurable economic factor that changes before the
economy starts to follow a particular pattern or trend. Leading indicators are used
to predict changes in the economy, but are not always accurate.
Coincident Indicator An economic factor that varies directly and simultaneously
with the business cycle, thus indicating the current state of the economy.
Lagging Indicator
1. A measurable economic factor that changes after the economy has already
begun to follow a particular pattern or trend.
2. A technical indicator that trails the price action of an underlying asset, and is
used by traders to generate transaction signals or to confirm the strength of a
given trend. Since these indicators lag the price of the asset, a significant move
will generally occur before the indicator is able to provide a signal.
11. INDUSTRY ANALYSIS
What is an industry?
Group of productive organizations that produce or supply goods,
services, or sources of income. In economics, industries are
customarily classified as primary, secondary, and tertiary;
secondary industries are further classified as heavy and light.
Primary industry includes agriculture, forestry, fishing, mining,
quarrying, and extracting minerals. Secondary or manufacturing
industry processes the raw materials supplied by primary
industries into consumer goods, or further processes goods from
other secondary industries, or builds capital goods used to
manufacture consumer and non consumer goods; secondary
industry also includes energy-producing industries and the
construction industry. Tertiary or service industry includes
banking, finance, insurance, investment, and real estate
services; wholesale, retail, and resale trade; transportation,
information, and communications services; professional,
consulting, legal, and personal services; tourism, hotels,
restaurants, and entertainment; repair and maintenance
services; education and teaching; and health, social welfare,
administrative, police, security, and defense services.
12. What are the industry dominant
economic traits?
Market size (Small markets don’t attract big fish)
Scope of competitive rivalry
Market/industry growth rate (life cycle)
Fast growth breeds new entry; slowdowns lead to increased
competition.
Number of rivals and their size
Number of buyers and their size
Level of backward and forward integration
Technological change (rate and scope)
Level of differentiation between firms’ products
Opportunities for economies of scale
Ease of entry and exit
Capital requirements.
13. What competitive forces are at
work in the industry and how
strong are they?
Porter’s Five Forces. Forces influencing industry
and competitive advantage:
Competitive Intensity (Rivalry Among Sellers)
Barriers to Entry (Potential for New Entrants)
Bargaining Power of Suppliers
Bargaining Power of Customers
Threat of Substitute Products
14. What are the forces of change in the
industry and what impact will they
have?
The most dominant forces the cause the industry to change are
called driving forces
Task 1 - identify the driving forces
Task 2 - assessing their impact on the industry (few are
important, generally)
Common Driving Forces
Changes in long term industry growth rate
Changes in who buy the products and for what reason
Product innovation
Technological change
Marketing innovation
Increasing globalization
Regulatory changes
Changing societal concerns, attitudes and lifestyles
15. How attractive is the industry ?
Growth potential
Driving forces
Entry/exit
Stability of demand
Competitive forces
Risk and uncertainty
Competition and its impact on the industry’s
future
18. INVESTMENT CLASSIFICATION OF
INDUSTRY
SELECTION OF AN EXPANDING INDUSTRY.
Expanding sector of an economy, or one growing
faster than the overall economy; opposite of
mature industry. Also called sunrise industry.