Guide
What is fundamental analysis (and how do you do it well)?
Updated June 27, 2026 · DeepTicker
If you are wondering what fundamental analysis is and how to do it without being a finance expert, you are in the right place. Fundamental analysis consists of studying the business behind a stock —how much it earns, how much it grows, what debt it carries and how much it costs on the market today— to decide whether its price makes sense. It is not about predicting the future or looking at charts: it is about answering, with data, three basic questions (is the company a good one?, is it expensive or cheap?, is it sustainable?). In this guide you will see how to do fundamental analysis step by step, with real examples and proven fundamental analysis methods, but told in plain language.
When you buy a share you do not buy a symbol on a screen: you buy a piece of a real company. Fundamental analysis starts from that simple idea of Warren Buffett and Benjamin Graham. Its goal is to estimate how much that business is really worth (its intrinsic value) and compare it with the price the market is asking. If the value is clearly greater than the price, there is a margin of safety; if the price prices in miracles the business will hardly deliver, it is wise to step aside. Unlike technical analysis —which only looks at the price and volume on the chart—, fundamentals look at the accounts: revenue, margins, cash flow, debt and competitive advantage.
The classic problem is that doing this well requires reading hundreds-of-pages annual reports, building spreadsheets and knowing formulas such as discounted cash flow. That is why most retail investors give up and end up buying "on intuition" or on what a headline said. The good news is that fundamental analysis can be systematized: there are three dimensions that, together, give a complete picture. The quality of the business (does it earn a lot on the capital it uses?, does it have a defensive ditch?), the valuation (is today's price reasonable or does it demand heroic growth?) and the franchise (would the business be profitable even if it stopped growing?).
DeepTicker exists precisely for that: to apply proven fundamental analysis methods but made simple, without you having to touch a spreadsheet. Each number comes explained, with no black boxes, so the more you use the tool, the more you learn to analyze on your own. You will see a quality DeepScore from 0 to 100, a Reverse DCF that tells you what expectations the current price prices in, and a clear verdict: Bargain, Reasonable, Demanding, Expensive or Priced-in bubble.
Throughout the guide we will use three complementary frameworks —quality and competitive advantage, discounted cash flow valuation and the franchise— because each one answers a different question. It is not financial advice: it is information and analysis so you decide for yourself, with judgment, instead of blindly.
Step by step
- 1
Understand the business before the numbers
Before looking at a single ratio, answer in one sentence: how does this company make money and who pays it? A good fundamental analysis starts by understanding the product, the customers and how it differs from the competition. If you cannot explain the business to a friend, do not analyze it: move on to another. Also ask yourself whether you understand the sector (a bank, a utility and a tech company are measured very differently) and whether the business seems durable 10 years out. This step avoids 80% of the typical mistakes.
- 2
Measure the quality of the business (DeepScore)
A quality company earns a lot on the capital it uses and sustains it over time. The central idea of quality analysis is the moat or defensive ditch: a strong brand, switching costs, network effect or cost advantage that keep the ROIC high. In DeepTicker this is summarized in the DeepScore, a score from 0 to 100 across five dimensions (Value, Growth, Track record, Profitability and Solvency) compared with the sector. A score of 80 or more is Elite; below 30 is Critical. Start by ruling out what is fragile before valuing anything.
- 3
Find out whether it is expensive or cheap (Reverse DCF)
Here many get lost with the classic discounted cash flow. DeepTicker turns it around with the Reverse DCF (discounted cash flow valuation): instead of inventing how much it is worth, it calculates what growth and what margin today's price prices in and lets you judge whether you believe it. A real example from the system: a stock trades at $372 and grows ~12%; the price is only justified if it grows ~18% a year for 10 years and raises its cash margin from 20% to 32%. If those requirements seem credible to you, go ahead; if not, it is expensive.
- 4
Check the franchise and the G < R rule
The third filter is the EPV or value of current earnings assuming no growth. If that value already exceeds what it would cost to replicate the business, there is a real franchise. To this is added a mathematical check: if the growth the price implies equals or exceeds the cost of capital (G ≥ R), the price is unsustainable, a "priced-in miracle". DeepTicker issues a warning when that happens. This step protects you from overpaying for nice stories that the math does not support.
- 5
Use the real cost of capital, not a generic one
A common mistake is valuing all companies with the same 8.5% discount. The cost of capital (WACC) changes a lot by industry: ~5% in banks, ~6% in utilities, ~7.8% in advertising and ~9.5% in software, according to the real cost of capital by sector. Using the real WACC instead of a made-up one can change the estimated value by 15-30%. DeepTicker applies the correct WACC by sector automatically, so you do not have to look it up or guess it by eye. It is the difference between a rigorous analysis and an approximate one.
- 6
Adapt the method to the type of company
Not everything is valued the same. The classic Reverse DCF does not work for banks (look at P/BV, ROE and Tier 1), nor for real estate REITs (FFO/AFFO, cap rate, yield), nor for a biotech with no revenue (pipeline and cash), nor for a recent IPO. Forcing a discounted cash flow there gives a misleading number. DeepTicker detects the type of company and tells you what to look at instead rather than spitting out a false figure. Knowing when a method does not apply is part of the craft of well-done fundamental analysis.
- 7
Put the three answers together and decide for yourself
The verdict comes from combining quality (DeepScore), price (Reverse DCF) and franchise (EPV). An Elite and cheap company is the ideal combination; a Critical and expensive one, a trap. But there are also intermediate cases: a great company at a demanding price may be worth waiting for, and a mediocre, very cheap one may be an opportunity or a value trap. DeepTicker gives you the three numbers explained; the final decision is yours. Write down your thesis in one line so you can review it honestly a year from now.
Fundamental analysis vs technical analysis: which one to use?
The most repeated doubt among beginners is whether fundamental or technical analysis is better. They are different tools with different horizons. The fundamental one studies the value of the business and answers "what to buy and at what price it makes sense?"; it serves to invest over the medium and long term. The technical one studies the behavior of the price on the chart and answers "when to enter or exit?"; it is used mostly by short-term traders. They are not enemies: many investors decide what to buy with fundamentals and fine-tune the when with a bit of technicals.
To build wealth sensibly, the weight must be on fundamental analysis. Charts tell you what already happened with the price; the accounts tell you the health of the business that will generate value tomorrow. If you had to choose a single lens, choose the fundamental one: an excellent business bought at a reasonable price tends to reward patience, while guessing the chart's next move is, for most, a lottery. DeepTicker focuses on the fundamental precisely because it is what the retail investor can master with data and method.
Typical mistakes when doing fundamental analysis as a beginner
The first mistake is falling in love with the story and forgetting the price: a great company can be a bad investment if you pay too much. The second is looking at a single ratio (usually the P/E ratio) without context: a P/E ratio of 25 does not mean the same in a bank as in a tech company, which is why the benchmarks must be by sector. The third is projecting growth flat into infinity; in reality, growth tempers year by year, which is why DeepTicker uses a multi-phase model that slows it down toward ~2.5%.
Other frequent errors: ignoring debt and solvency, relying on accounting earnings instead of real cash flow, and applying the same method to companies that are valued differently (banks, REITs, biotech). The importance of the cost of capital is also underestimated: using a generic one distorts the value by 15-30%. The antidote to all these mistakes is an orderly and transparent process. Since DeepTicker shows you how each number is calculated, you start detecting these biases in yourself and, without realizing it, you learn to do fundamental analysis better each time you analyze a company.
What do I need to start doing fundamental analysis?
You do not need to be an economist or have Bloomberg. You need three things: curiosity to understand businesses, a reliable data source and a repeatable method. Before, that meant downloading annual reports, copying figures into Excel and applying formulas by hand —hours per company and many chances of making a mistake—. Today you can lean on a tool that already brings the data, applies the correct frameworks by sector and explains the result.
With the DeepTicker screener you type in any stock in the US, Europe, IBEX or China and you instantly see its quality DeepScore, its Reverse DCF (expensive or cheap) and the G ≥ R warning if the price prices in a miracle. You can also filter thousands of companies with the screener of 140+ filters (with presets such as Graham or Magic Formula) to find candidates that meet your criteria. Starting is free: you have a 14-day trial with no card, and My Portfolio and the Contest are free forever.
Doing fundamental analysis well consists of answering with data three questions —is it good?, is it cheap?, is it sustainable?— instead of investing blindly. DeepTicker gives you that professional rigor made simple: the DeepScore for quality, the Reverse DCF for price and the franchise test for sustainability, all explained so you learn by using it. It is not financial advice; it is the information so you decide for yourself with judgment. Try the DeepTicker screener and analyze your first stock in minutes.
Frequently asked questions
What exactly is fundamental analysis?
It is the study of the business behind a stock —revenue, margins, cash flow, debt and competitive advantage— to estimate its real value and compare it with the market price. Its purpose is to decide whether a stock is expensive, cheap or fairly priced.
What is the difference between fundamental and technical analysis?
The fundamental one analyzes the value of the business to decide what to buy and at what price, with a medium and long-term horizon. The technical one analyzes the price chart to decide when to enter or exit, mostly in the short term. They are complementary, not mutually exclusive.
Can I do fundamental analysis without knowing finance?
Yes. The key concepts (quality, valuation and franchise) are intuitive when explained well. Tools like DeepTicker do the calculations for you and teach you how each number is obtained, so you learn while you analyze, without needing spreadsheets.
What is the Reverse DCF and why is it useful?
It is a discounted cash flow in reverse: instead of inventing how much a stock is worth, it calculates what growth and what margin the current price prices in. This way you do not depend on your own projections; you only judge whether the expectations already in the price are credible.
Does the same method work for all companies?
No. Banks, real estate REITs, biotech with no revenue and recent IPOs are valued with specific metrics (P/BV and ROE, FFO and cap rate, pipeline and cash). Forcing a discounted cash flow on them gives a misleading number; DeepTicker detects it and tells you what to look at.
How long does it take to analyze a stock?
By hand, with reports and spreadsheets, it can take hours per company. With a tool that already brings the data and applies the correct frameworks by sector, you get a complete first reading (quality, valuation and franchise) in a matter of minutes.
Does fundamental analysis guarantee making money?
It guarantees nothing: the market is uncertain and no metric predicts the future. What it provides is the judgment to avoid overpaying and to recognize solid businesses. It is educational information and analysis, not financial advice or a buy recommendation.
Educational content by DeepTicker. This is not financial advice or a recommendation to buy or sell. Investing involves risk of loss.
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