Fundamental analysis is an important part of stock investing. You can either refer to the company’s quarterly reports for the data or use any fundamental analysis and stock screening platform to analyse the data. Using a stock screening platform makes the job much easier as you get all the necessary data curated in one single place.
What to look at before purchasing any stock?
Equity Investing is the first step towards wealth creation over the long term. Sounds easy but it’s not that simple when it comes to allocating money in stocks or other equity-related instruments. The reason being, there are more than 6000 stocks listed on the Indian stock exchange, and picking a couple from them seems to be a herculean task.
However, it is not that difficult anymore. With access to fundamental analysis platforms and stock screeners, you can pick out the best possible stocks under any industry in minutes. You just need to know some of the basic parameters using which you can filter out good stocks, and the rest of the job is simple.
Parameters to narrow down your stock analysis search:
Sector Analysis: In order to pick a stock, you will need to first analyze the sector and industry which seems to have a good growth potential in the near future. Once you figure out the sector, then the actual job of stock picking begins. If you don’t begin here, it will be similar to finding a needle in a haystack.
Financial Ratios: After you select the industry and sector, it’s time to use the financial ratios to find out the strength and weaknesses of the companies. Financial ratios depict the quality of the company and its financial strengths. These are used to separate good-quality stocks from poor-quality stocks. Some of the key ratios which are to be looked at while analyzing a company is:
- Price to Earnings Ratio (P/E)
- Price to Book Value (PB Ratio)
- Return on Equity (ROI)
- Debt to Equity Ratio
- Earnings before interest, taxes, depreciation, amortization (EBITDA), and some more.
Where to find the stock-related data?
Now that you know the basics and also the parameters with which you can find out the stocks, the question remains, how to find out this information.
There are mainly two ways in which you can find out the information on any stock. Firstly, you can directly read the Financial report of the company in its Annual/Quarterly report. You will get all the necessary numbers such as the profit, sales, EBITDA, etc. Whereas you will have to calculate the ratios on your own. Looking at annual reports can be time-consuming and pretty complex therefore there is another way to bypass this process.
The second process is much easier and you can get all the necessary data and ratios about companies in one single place. You can effortlessly use any Stock Screening platform or Fundamental Analysis platform to get all the necessary details, such as financial ratios, analyst’s forecasts, and also get the cumulative data of multiple years all under one platform.
There are many free as well as paid fundamental analysis platforms in India where you can perform stock analysis on any listed stock easily. Screener, Tickertape, MoneyControl, Investing. com, Investello are some of the platforms using which you can obtain all the necessary data related to stocks for Free.
Beginners can use any of the fundamental analysis platforms to get all the necessary data whereas experts could analyze the quarterly results of companies to form an opinion about the company.