Fundamental analysis is rooted in the belief that the market may not consistently provide accurate pricing for a stock. It involves examining external factors, such as earnings reports and economic news releases, to gauge their potential impact on future prices, allowing investors to make informed decisions for profit. While technical analysis is often associated with short-term traders who seek patterns for timely trades, fundamental analysis is favored by investors with a long-term holding strategy.

Many fundamental analysis investors adhere to "value investing," a strategy focused on identifying stocks priced at a discount relative to their calculated intrinsic value, which is believed to be higher than the market price. Investors employing fundamental analysis often take long-term positions in such undervalued stocks.

The primary objective of a fundamental analyst is to determine the intrinsic value of a stock. This involves examining a company's profile, recent earnings reports, expected news, and assessing whether the market has accurately factored in this information into the stock's price. Successful fundamental analysts delve into financial statements, scrutinizing a company's revenue, expenses, assets, liabilities, and other pertinent financial aspects to comprehend the stock's true value.

To embark on fundamental analysis, one can begin by understanding how stock prices are determined in the market. By learning to interpret earning reports, financial statements, balance sheets, cash flow statements, and other financial indicators, investors can grasp how stock prices respond to this information. Armed with this knowledge, investors can make more confident investment decisions, particularly when they perceive a stock to be underpriced based on their understanding of the company.