What does fundamental analysis focus on?

Fundamental analysis primarily focuses on evaluating a company's financial health and performance. This approach involves analyzing various financial statements, such as the income statement, balance sheet, and cash flow statement, to assess the company's profitability, revenue growth, debt levels, and overall financial stability. By examining these elements, analysts can determine the intrinsic value of a company's stock and make informed investment decisions.

This method extends beyond just the surface-level details of stock prices and includes a comprehensive look at factors like the company's earnings potential and operational efficiency. All of these contribute to understanding the long-term sustainability and growth prospects of the business, making fundamental analysis a key tool for investors seeking to assess whether a stock is undervalued or overvalued.

While evaluating macroeconomic conditions, assessing industry-specific news, and investigating historical stock prices are all useful activities in the broader context of investing, they do not encapsulate the primary focus of fundamental analysis. Instead, they may complement the analysis or provide context but do not take precedence over the direct evaluation of a company's financial metrics and performance indicators.