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Fundamental Analysis

Fio provides it clients with standard news and fundamental data on companies, both of which are critical parts of the decision making process for investing in stocks. "Fundamental analysis" is available in e-Broker in the "Securities" section in the main menu.

We consider the following to be the basic information within fundamental analysis: market capitalization, accounting value per share, price / accounting value, revenues, price / revenues, profit per share, P/E, profit margin, return on equity, return on assets, dividend yield ... and many other indicators.

The "Financial Reports" section in e-Broker is available for clients who need a greater range of information. Here clients will gain more in-depth financial information about individual titles pursuant to applicable accounting standards.

Fundamental analysis is mainly applied to long-term investing and investments.

Market capitalization

A company's market capitalization is obtained by multiplying the number of shares issued by the company by the market price per share. The market capitalization number approximates the total value of the company and its size.

Share book value

Share book value = (Equity - priority shares) / Number of issued shares. This number allows the definition of the value of share based on the financial statements issued by the company. This can be used when defining the market value of a share.

Price / book value

The larger and better the company, the higher this value. For less recognized companies and those with unclear futures, this number drops. For companies listed on the DJIA the average is 3.5, on the S&P500 it is 2.8 and the NASDAQ is 2.6.

Earnings

Company earnings for the previous accounting year. In the US, companies commonly have separate accounting and calendar years.

Price / earnings

Ratio of price to earnings per share. This value should be lower than 2. Only if profitability is significantly higher can this value be higher.

Profit per share

The most monitored indicator for every company. This information provides stockholders with an indicator of a company's success. Dividends are subtracted from net profit as these are paid annually, or quarterly for American companies.

P / E

The current ratio of price / earnings per share. The same as for "Price/book value" and a "correct" value cannot be determined. It corresponds to the period in which the company's after tax profit matches its market capitalization. E.g. P / E 15 means that the company's current performance is equal to its market value over a period of 15 years. Currently the P/E for the DJIA is around 30, for the S&P500 it is around 32 and for the NASDAQ it is around 37.

Profit margin

Net profit / total earnings x 100. This percentage expresses the net profit from company earnings.

Return on equity

ROE, net profit / equity. The indicator shows how well a company is leveraging its equity.

Return on assets

ROA, (net profit + interest after tax) / total assets. This indicator shows earnings resulting from total capital.

Dividend yield

Dividend per share / share price. Annual per cent yield from dividends at the current price. For any stockholder this is only one of the returns from holding a share in addition to the capital returns from increases in the price of the share.


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