In this post, we will learn how we can do fundamental analysis of any company with the help of this screener website, and can easily know whether it would be right to invest in that company or not.
First of all we have to open the screener website.
Whatever company you want to do fundamental analysis of, you have to search by writing the name of the company.
Now complete details of that company will be shown with the help of which fundamental analysis can be done.
We know what to look for and how to know if a company is a good investment or not.
market cap:-
Market cap is visible first. This tells us how big the market company is.
Suppose the market cap of a company is Rs 100 crore, then he will have to pay Rs 100 crore to buy the company completely.
People often make the mistake of trying to judge whether a company is big or small by its stock price.
But this is not the right way. To know whether any company is small or big, we have to look at the market cap.
If the market cap is low it means. The company is a small cap or mid cap company.
If the market cap is high then the company is a large cap company.
current price:-
It tells us the current price of the share, suppose if the current price of a company is ₹500 it means. Its current price of one share is ₹500.
High/Low:-
High Low tells us how much the share price has gone low and how high it has gone in the last 1 year.
If the fundamentals of the company are not strong and the price of the stock is around the low of the last 1 year then one should not invest in the company.
If you are a beginner then invest in a company which is fundamentally strong and whose share price is 40% more than its low in the last 1 year.
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stock pe:-
We also call this PE ratio. The PE ratio tells us how much money a company has to invest to earn ₹1.
If the PE ratio of a company is 10, it means that it has to invest ₹10 to earn ₹1 in the company.
We use this to compare companies in the same industry. Which company is cheaper?
Generally it is believed that if the PE ratio of the company is more than 20 then it is overvalued, that is, we are getting it at an expensive price.
book value:-
Book value tells us how much money shareholders will get for each share if a company goes bust.
Let us understand from this example:-
- Suppose the company is AB Limited.
- The price of one share is ₹200.
- Its book value is 50.
- Now if the company sinks completely. So you will get ₹50 for each share.
Asset – Liabilities = Book Value
book value per share = book value/ total number of share
We use it to see the valuation of the company. If the share price is around the book value or more than the book value then it is said that the company is undervalued.
But just by looking at the book value it cannot be said that the company is undervalued, for this many other parameters have to be checked.
Dividend Yield:-
This tells us what percentage of dividend it gives on each share every year.
For example, the price of a share is ₹100 and the dividend yield is 2%, which means the company will give a dividend of two percent on each share.
roce (return on capital employee):-
Return on Capital Employed shows how much profit the company made in a year against the amount of capital invested by the investors.
It is believed that if the company is making more than 20% returns for the last several years then the company is making good profits.
face value:-
Face value means what is the value of a share of the company as per the accounts of the company. This is not the price of the share, do not get confused in it. It is not used for fundamental analysis. The company uses it for internal calculations.
In simple words, the value of the company’s shares in the share certificate of the company is called face value.
EPS (Earning Per Share):-
This tells us how much profit the company is making on each of its shares.
With its help, we can compare two or more companies. Which company is making more profit on each of its shares.
debt to equity ratio:-
While debt to equity ratio tells us how much debt the company has.
If these fibers are more than one then it is not considered good.
It is possible that the company has taken too much loan, that is why the debt to equity ratio is more than one.
And it is possible that the company may get into trouble due to excess loan and debt.
That is why such companies should be selected for investment which are debt free. That means the debt to equity ratio should be zero.
promoter holding :-
Promoter holding tells us what percentage of shares the promoter (owner) of the company holds.
Mostly it is considered good only when the promoter holding is more than 60%. And the higher it is, the better it is considered.
The thing to keep in mind is that along with the promoter holding, none of the promoter’s shares should be pledged.
If the promoter’s shares are pledged then one should not invest in such companies.
Sometimes promoters have more than 70% holding but more than half of this is mortgaged. This thing has to be checked carefully that the promoters’ holding is not mortgaged at all.
We get a lot of information from promoter holding, if promoter holding is high then we can assume that the company will grow further only because the holding is so high.
Along with this, the history of promoter holding for the last several years should be checked.
If it is increasing for many years then it is a good sign for us.
pladged percentage:-
What percentage of shares of the promoter holding is pledged can be known through this thread.
If the pledge percentage is increasing for many years then one should not invest in shares.
It should always be zero.
debtor days :-
Debtor days means in how many days the company is able to receive money from its supplier.
The more work you do on this day, the better.
reserve :-
If the company is a job profit form, it has two positions. Your share holders may be divided in the form of first dividend. Secondly, one can keep the portfolio stored with him so that the necessary documents collected can be used in the business. Do not have to take loan from outside.
This tells us that the company has more reserves and the reserves have been increasing for the last several years. So such companies are saving money for future emergencies so that they do not have to take a loan if they get into any trouble.
inventory turn over:-
Inventory turnover ratio measures how often a company sells its goods.
The more fiber it has, the better. If the inventory turnover ratio of the company is high, it means that the company sells its goods quickly.
It is used to compare companies in similar industries.
industry PE:-
Industry PE is used to determine whether a company is overvalued or undervalued compared to its industry. It is done to know.
Like the PE of the industry is higher than the PE of any company. This means the company is currently overvalued.
In this way, industry PE and company PE can be compared with each other.
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