Fundamental analysis is the practice of evaluating a company's
stock price by comparing base elements in the company's balance
sheets as well as general market factors. It does not include
chart analysis, which is the domain of technical analysis. The
main principle of fundamental analysis is to find profitable
companies to invest in by comparing revenues, sales, management,
etc. There are two types of drivers to look at in fundamental
analysis: internal drivers and external drivers. Internal
drivers are company specific (e.g. revenue, net income, assets,
debts, etc.). External drivers are things that can affect the
company's profitability but is not company specific (e.g. the
economy, industry averages, etc.). The analysis of internal
drivers can be broken down into two components: balance sheet
numbers/valuations (you can calculate); and,
news/management/analyst ratings/economic outlook (you cannot
calculate). The items you cannot apply numbers to like news,
management style, etc., are subjective so discuss