4 Key Fundamental Analysis Criteria
•By Mahersaham Team
Artikel ini juga tersedia dalam Bahasa Melayu
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Fundamental Analysis is a study conducted to identify the true value or ''intrinsic value'' of a company.
It is also a study of the company''s business, financials, and management.
The main point of the study is to determine whether a company is of high quality or otherwise.
A stock''s price movement is largely influenced by the company''s performance.
If a company is able to ''make money'', generate profits, and has great potential, then the share price will rise in the long term.
If the business is not performing well, not profitable, and heading towards bankruptcy, then the share price will fall.
Fundamental analysis is the most commonly used form of analysis by long-term stock investors.
At Mahersaham, the 4 criteria that we emphasise for our students and clients to study are:
The four main criteria are PE Ratio, ROE (Return on Equity), Net Profit trend, and number of shares outstanding. These four help investors assess whether a company is financially sound and worth investing in.
Generally, a PE Ratio below 15 is considered reasonable for most sectors. However, it depends on the industry — technology companies typically have higher PE ratios compared to utility companies. Compare the PE with the industry average for a more accurate assessment.
ROE measures a company''s efficiency in generating profits from shareholders'' equity. An ROE above 10% indicates the company manages capital efficiently, whilst an ROE above 15% is considered excellent.
You can use websites such as malaysiastock.biz, Bursa Marketplace, or broker platforms like Mplus to check financial reports, PE Ratio, ROE, and other fundamental data for free.
Mastering these four fundamental criteria enables you to screen quality stocks and make smarter investment decisions based on data, not emotions.
Download our free basic investment ebook for a complete guide to fundamental analysis from the ground up.
Ready to start investing? Open your CDS account to begin buying stocks on Bursa Malaysia.