Fundamental analysis (English. Fundamental analysis) – term для обозначения ряда методов прогнозирования рыночной стоимости компании, based on the analysis of financial and operational indicators of its activities.
Fundamental analysis is used by investors to assess the value of a company, which reflects the state of affairs in the company, profitability of its activities. At the same time, the financial indicators of the company are analyzed.: revenue, EBITDA (Earnings Before Interests Tax, Deprecation and Amortization), net profit, net worth of the company, obligations, cash flow, the amount of dividends paid and the company's performance.
«Внутренняя стоимость» in most cases does not coincide with the price of the company's shares, which is determined by the ratio of supply and demand in the stock market. Инвесторов, using fundamental analysis in their activities, primarily interested in situations, when «внутренняя стоимость» the company's shares exceed the price of shares on the stock exchange. Such shares are considered undervalued and are potential investment targets.. Buying undervalued stocks, investors are counting, that in conditions of market efficiency, the price of shares on the stock market will tend to «внутренней стоимости», ie. in case of undervalued shares – will grow.
The American School of Fundamental Analysis is based on the classic work of Benjamin Graham and David Dodd «», published by them in 1934 year. Graham himself used fundamental analysis in practice and was a successful investor. One of the most famous followers of Graham, using fundamental analysis – .
The main indicators that are analyzed
Revenue – funds received from the sale of goods or services.
Net profit (Net Income) – part of the company's profit, which remains at his disposal after taxes, сборов, deductions and other obligatory payments to the budget. Net profit is used to increase the company's working capital; formation of funds and reserves, and reinvestment in production.
Net income is the most important financial indicator, which is the source of further development of the enterprise.
Company net worth (Net worth) – сумма акционерного капитала, consisting of ordinary shares, reserve capital and retained earnings.
Commitments – one-sided relationship (debtor) must commit to the benefit of the other party (Lender) certain actions. These actions are: transfer of certain property, completing of the work, payment of money, as well as other actions.
Cash flow or cash flow (Cash Flow; CF) – it is a numerical series abstracted from its economic content, consisting of a sequence of distributed over time payments. Used to calculate indicators of economic efficiency of investments, as well as to analyze the movement of funds of an economic entity in time.
Amount of dividends paid or dividend per share (DPS) – the total amount of dividends is paid throughout the year (including interim dividends, but not including special dividends), divided by the number of ordinary shares.
Company performance indicators – volume of production or sale of services.
Analytical indicators
EBITDA – analytical indicator, equal to the amount of profit before deducting interest expenses, payment of taxes and depreciation charges.
EPS (Earnings Per Share) – доходность на акцию. The EPS indicator is one of the most important. It is on this basis that the investor gets an approximate estimate of the potential profitability of the company's shares. Usually, enterprises do not pay all annual profits in the form of dividends.. Shareholders are only entitled to this profit after all fees have been paid, taxes and interest on loans. Respectively, for them, the most important thing is to estimate the size of the company's profit after all these expenses have been paid.
P/E (Price / Earning Per Share) – market price to earnings per share ratio. When using fundamental analysis to evaluate companies, the P / E ratio is an extremely important indicator, which the, Besides, also has wide application. It denotes the ratio of the market price of a share to earnings per share. In this case, income means the amount of net profit (without income tax, dividends on preferred shares and other mandatory payments from profits), attributable to one ordinary share. In a general sense, the P / E value shows the number of years, which the company will need (at a constant level of profit), to recoup the price of your shares. All other things being equal, preference should be given to companies with a lower P / E ratio.. Buying shares with a high P / E ratio will be justified only if, if an increase in the company's profits is expected.
ROA (Return On Asset) – return on company assets. Return on assets is a measure of a company's profitability. In fact, ROA reflects, how effectively all the assets at its disposal are used at the enterprise. Long-term growth in the profitability of assets indicates their rational use.
TAT (Total Assets Turnover) – asset turnover. It characterizes the intensity of exploitation of all existing assets of the company.. With it, an investor can understand, how efficiently the assets are used in terms of sales. The growth of this indicator in the enterprise and in the industry as a whole indicates an acceleration in the circulation of enterprise funds., what, in its turn, is a positive characteristic for the company
ROE (Return On Equity) – доходность собственного капитала. The indicator is a very common parameter., used to assess the return on shareholders' investments in an enterprise. When calculating this ratio, equity is the difference between all the assets of the company and its liabilities.
P/D (Price / Divedend Per Share) – норма дивидендного дохода. It reflects the ratio of the market price of a share to dividends, which are paid per ordinary share. If an investor is interested in receiving dividends, not enterprise management, then this indicator is extremely important for him. Also worth noting, that this indicator is most important for fairly mature companies, as it shows their ability to pay dividends. Therefore, when analyzing young companies, this value may not be accepted.. This is due to the fact, what profit, даже если она есть, so insignificant, what will not be used to pay dividends, and to invest in the further development of the company.
P/CFPS (Price / Cash Flow Per Share) – this parameter shows the ratio of the market price of an ordinary share to the cash flow per one ordinary share. It is one of the main performance indicators of companies., which are used in the stock market. To calculate cash flows requires access to more complete financial statements of the company.
P/S (Price / Sales) – financial indicator, equal to the ratio of the company's market capitalization to its annual revenue. The price / revenue ratio is one of the main indicators, used for comparative assessment of the investment attractiveness of joint-stock companies. A homogeneous industry is allowed as a prerequisite, where reasonable investors expect, that revenue consistently generates corresponding amounts of profit or cash flow. Малые значения коэффициента сигнализируют о недооцененности рассматриваемой компании, большие – about overvaluation. A significant advantage of P / S is that, that it does not take negative values, as the P / E ratio, and also more resistant to subjective factors and abuses of company management. The downside is that, that the numerator is a measure of equity, and the denominator represents the return on equity and debt.
Методы оценки компании
As a rule, two methods are sufficient for fundamental analysis.:
- comparative analysis (with targeting using multipliers)
- DCF analysis (it is considered more accurate and is used by most leading companies)
There are other assessment methods, but as a rule, they are used to appraise companies in the sale and the appraisal is performed by appraisal companies.
Fundamental analysis makes an assessment of the value of shares only on the basis of the financial results of the company. Аналитик не смотрит на charts companies. If the company is trading at a significant discount to peers, then he will recommend it for purchase. Or if, when building a DCF model, a potential in 50%, even in a falling market, the share will also be assigned a recommendation – «Buy».
The choice of recommendation depends on the growth potential:
ПОКУПАТЬ – growth potential is greater 15 %
KEEP – potential of – 15 % to + 15 %
ПРОДАВАТЬ – fall potential is greater 15 %
Data sources:
- Official sites of issuers
Example comparative analysis of the company «Ukrsotsbank»
1. EPS (Earnings Per Share)
EPS = (net profit)/(number of shares)
2. P/E (Price / Earning Per Share)
P/E = (рыночная цена)/(доход на акцию)
3. ROA (Return On Asset)
ROA = (financial year income)/(share capital)
4. TAT (Total Assets Turnover)
TAT = (выручка от продаж)/(average annual asset value)
There is no point in counting to this issuer.
5. ROE (Return On Equity)
ROE = (net profit)/(собственный капитал)
6. P/D (Price / Divedend Per Share)
P/D = (рыночная цена)/(дивиденд на акцию)
Since no dividends were paid, impossible to count.
7. P/CFPS (Price / Cash Flow Per Share)
P/CFPS = (рыночная цена)/(cash flow per share)
8. P/S (Price / Sales)
P/S = (рыночная цена)/(sales)
К данному эмитенту не применяется.
Посчитать я это все посчитал, но показывать пока не готов. Боюсь не то получилось. That's why попрошу показать пример фундаментального анализа украинской компании. И что почитать, что посмотреть?
Не судите строго, я торгую по новостям, но хотелось бы освоить фундаментальный анализ, сначала сравнительный, затем научиться строить DFC модель.
