Fundamentalanalys

Fundamentalanalys, often written fundamentalanalys in Swedish and closely related to the English term fundamental analysis, is a method for evaluating the value of a security by examining related economic, financial, and qualitative factors. Its central idea is that a security’s true worth is determined by the underlying fundamentals of the issuing company or asset, and that market prices may deviate from this intrinsic value in the short term.

The analysis combines quantitative data from financial statements—such as income statements, balance sheets, and cash flow statements—with qualitative factors like management quality, competitive position, industry dynamics, regulatory environment, and business model. Common quantitative tools include profitability, liquidity, and leverage ratios, as well as valuation methods such as discounted cash flow (DCF), dividend discount models, and multiples like price-to-earnings (P/E), price-to-book (P/B), and enterprise value multiples (EV/EBITDA).

The typical process involves forecasting future cash flows or earnings, estimating an appropriate discount rate (often linked to cost of capital), and calculating an intrinsic value. Investors compare this intrinsic value to the security’s current price to judge whether it is underpriced or overpriced, sometimes applying a margin of safety and performing sensitivity analyses to account for uncertainty.

Fundamental analysis is commonly associated with long-term investing and contrasts with technical analysis, which focuses on price patterns and market trends. Its history includes figures such as Graham and Dodd, and proponents like Buffett, though its effectiveness depends on the quality of inputs and the assumptions used. Limitations include accounting differences, cyclical volatility, and unforeseen changes in the business environment.