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Fundamental And Technical Analysis In Equity Valuation

Fundamental And Technical Analysis In Equity Valuation FUNDAMENTAL AND TECHNICAL ANALYSIS IN EQUITY VALUATION


INTRODUCTION

Fundamental analysis is the examination of the underlying forces that affect the well being of the economy, industry groups and companies. As with most analysis, the goal is to develop a forecast of future price movement and profit from it. At the company level, fundamental analysis may involve examination of financial data, management, business concept and competition. At the industry level, there might be an examination of supply and demand forces of the products. For the national economy, fundamental analysis might focus on economic data to assess the present and future growth of the economy.

To forecast future stock prices, fundamental analysis combines economic, industry, and company analysis to derive a stock‘s fair value called intrinsic value. If fair value is not equal

to the current stock price, fundamental analysts believe that the stock…

Peer Group Analysis

Peer Group Analysis (Materials on this article was obtained from www.tutorialshero.com) Peer Group Analysis

It is the practice of comparing a firm's result to those of similar firms. Commercial industry classification systems often provide a starting point for constructing a peer group. Start with companies in the same industry, review the subject company and its competitors' annual reports, and confirm each comparable company's primary business activity is similar to that of the subject company.

Useful questions to ask are:

·    What proportion of revenue and operating profit is derived from business activities similar to those of the subject company?

·    Does a potential peer company face a demand environment similar to that of the subject company?

·    Does a potential company have a finance subsidiary?


Principles of strategic analysis A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace. Po…

Industry Classification Systems

Industry Classification Systems INDUSTRY CLASSIFICATION SYSTEMS

Commercial industry classification systems include:


1.    The Global Industry Classification Standard (GICS)

It is an industry taxonomy for use by the global financial community. It is used as a

basis for S&P and MSCI financial market indexes in which each company is assigned to a sub-industry, and to a corresponding industry, industry group and sector, according to the definition of its principal business activity.

2. The Russell Global Sectors classification system

It uses a three-tier structure to classify global companies based on the products or services a company offers.

3. The Industry Classification Benchmark (ICB)

It categorizes individual companies into subsectors based primarily on a company's source of revenue or where it constitutes the majority of revenue.


Various governmental agencies use a number of classification systems to facilitate the comparison of data over time and among countries tha…

Uses Of Industry Analysis

Uses Of Industry Analysis USES OF INDUSTRY ANALYSIS

Company analysis and industry analysis are closely interrelated. Company and industry analysis together can provide insight into sources of industry revenue growth and competitors' market shares and thus the future of an individual company's top-line growth and bottom-lin profitability.

Industry analysis is useful for:

·    Understanding a company's business and business environment
·    Identifying active equity investment opportunities.
·    Formulating an industry or sector rotation strategy.
·    Portfolio performance attribution.
There are three main approaches to classifying companies:

1. Products and/or service supplied.

This is the main approach to industry classification. Companies are categorized based on the products and/or services they offer. The term sector is used to refer to a group of related industries.

2. Business-cycle sensitivities.


A cyclical industry is sensitive to business cycles. Its revenues…

Porter's 5 Forces Analysis

Porter's 5 Forces Analysis INDUSTRY AND COMPANY ANALYSIS

Introduction

Industry analysis is a type of investment research that begins by focusing on the status of an industry or an industrial sector.

Why is this important? Each industry is different, and using one cookie-cutter approach to analysis is sure to create problems. Imagine, for example, comparing the P/E ratio of a tech company to that of a utility. Because you are, in effect, comparing apples to oranges, the analysis is next to useless.

In each section we'll take an in-depth look at the different valuation techniques and buzz words used in a particular industry, complete a 5-forces analysis on the state of the market and point you in the direction of industry-specific resources.

Porter's 5 Forces Analysis

If you are not familiar with the five competitive forces model, here is a brief background on who developed it, and why it is useful.

The model originated from Michael E. Porter's 1980 boo…

Approaches And Techniques In Contract Negotiation

Approaches And Techniques In Contract Negotiation APPROACHES TO NEGOTIATION:
There are four different approaches to negotiation and the outcome of the negotiation depends on the approach. The various approaches to negotiation are as follows:
WIN- WIN INTEGRATIVE APPROACH
This negotiation approach is also called as collaborative or creating value approach. It is superior to all negotiation approaches. It results in both the parties feeling that they are achieving what they wanted. It results in satisfaction to both the parties. It has the following characteristics.
There are a sufficient amount of resources to be divided and both sides can ‘win’The dominant concern here is to maximize joint outcomes.The dominant strategies include cooperation, sharing information, and mutual problem-solving. This type is also called ‘creating value’ since the goal here is to have both sides leave the negotiating feeling they had greater value than before. Since the integrative approach …

Reasons for Negotiating

Objectives of Negotiation Objectives of Negotiation in procurement & supply chain mgt
Several objectives are common to all procurement or sales negotiations:
To obtain the quality specifiedTo obtain a fair and reasonable priceTo get the supplier to perform the contract on time.To exert some control over the manner in which the contract is performedTo persuade the supplier to give maximum cooperation to the purchasing company.To develop a sound and continuing relationship with competent suppliers.To create a long-term relationship with a highly qualified supplier.ADVANTAGES OF NEGOTIATION
The advantages of negotiation are that it limits the number of players to those involved in the dispute. This allows for a focused approach to problem solving.Arbitration allows a third party to resolve disputes between two or more parties. The advantage of this system is that it allows a neutral party to decide on a resolution to the matter presented which is binding upon all parties.M…