Fundamental Analysis is a method of evaluating a companyís intrinsic value by examining its financial statements, economic environment, and industry performance. The goal is to determine whether a stock is undervalued or overvalued compared to its current market price, helping investors make informed long-term investment decisions.

At its core, fundamental analysis involves studying both quantitative and qualitative factors. Quantitative analysis includes assessing key financial metrics such as earnings per share (EPS), price-to-earnings (P/E) ratio, debt-to-equity ratio, return on equity (ROE), and cash flow. These indicators provide insights into a companyís profitability, efficiency, and financial stability.

Qualitative factors, on the other hand, focus on non-numerical elements such as the companyís management quality, brand reputation, competitive advantage, business model, and industry dynamics. Analysts also consider macroeconomic factors like interest rates, inflation, GDP growth, and government policies that can influence business performance.

There are two primary approaches within fundamental analysis ó top-down and bottom-up. The top-down approach starts with analyzing the overall economy, then moves to sectors and finally to individual companies. The bottom-up approach, in contrast, focuses first on a companyís fundamentals regardless of broader economic conditions.

Investors use the findings from fundamental analysis to estimate a companyís intrinsic value. If the intrinsic value is higher than the current market price, the stock may be considered undervalued and a potential buying opportunity. Conversely, if it is lower, the stock may be overvalued and suitable for selling or avoiding.

In summary, fundamental analysis is a cornerstone of value investing and long-term wealth creation. It enables investors to look beyond short-term price fluctuations and focus on the true financial health and potential of a company, aligning investment decisions with underlying business performance rather than market speculation.