What It Means
Fundamental analysis means evaluating a company's financial statements, business model, management quality, and broader economic environment to estimate what it's actually worth — its intrinsic value — rather than just watching its price chart.
How It Works
A fundamental analyst looks at things like revenue growth, profit margins, debt levels, and valuation ratios (P/E, P/B) from the company's quarterly and annual filings, then compares that against its current market price to judge whether it's cheap, fairly priced, or expensive. This is the opposite approach to technical analysis, which studies price and volume patterns and largely ignores the underlying business. Long-term investors tend to lean on fundamentals, since a company's real financial health typically shows up in its price over months or years, not in a single session.