{"id":136,"date":"2025-09-17T14:42:49","date_gmt":"2025-09-17T14:42:49","guid":{"rendered":"https:\/\/www.stockgro.club\/stoxo\/resources\/?p=136"},"modified":"2025-09-17T14:58:52","modified_gmt":"2025-09-17T14:58:52","slug":"how-to-do-fundamental-analysis-of-stocks","status":"publish","type":"post","link":"https:\/\/www.stockgro.club\/stoxo\/resources\/how-to-do-fundamental-analysis-of-stocks\/","title":{"rendered":"How to Do Fundamental Analysis of Stocks?"},"content":{"rendered":"\n
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Amongst the top pillars of stock selection is analysing its fundamentals. Often, the first step of analysing an investment opportunity is to conduct fundamental analysis on the security. Fundamental analysis requires a thorough examination of a stock\u2019s intrinsic value rather than assuming its market price at face value.  <\/p>\n\n\n\n

With advancements in technology, this can now be conducted fairly quickly, accurately, and predictably using stock market AI<\/a> tools. In this blog, we explore how to do fundamental analysis of stocks using Artificial Intelligence (AI). This will include the use of quantitative measures such as financial statements, ratios, and metrics, along with qualitative factors, including management quality and peer comparison, among others.<\/p>\n\n\n\n

How to Do Fundamental Analysis of Stocks?<\/strong><\/h2>\n\n\n\n

Fundamental analysis of stocks done by analyzing company’s financial statements, including the income statement, balance sheet, and statement of cash flows. AI tools and software such as Stoxo by Stockgro, India\u2019s first stock market research AI tool, can simplify your fundamental analysis. Using Stoxo, you can conduct a thorough analysis of a stock\u2019s financial statements with AI<\/a>. <\/p>\n\n\n\n

Income Statement: Revenue, Profitability<\/strong><\/h3>\n\n\n\n

The first step of fundamental analysis often begins with analysing the financial statements of a company. Key metrics such as revenue and profit indicate the company\u2019s efficiency, comparative profitability, and profit potential.

For example, consider the total revenue figure on the company\u2019s income statement. This can be compared to the revenue of the previous period to understand the growth trajectory. If the revenue has improved, we can further study the revenue components to determine which component has contributed the most. Similarly, other metrics can also be evaluated in this way.<\/p>\n\n\n\n

Let us see how Stoxo can help with the fundamental analysis of income statements. Let\u2019s take the example of Infosys. We will evaluate Infosys\u2019s latest available income statement through Stoxo. <\/p>\n\n\n\n

Initially, we use a customised prompt to ask the AI tool to analyse the income statement, sharing the link to it.<\/p>\n\n\n\n

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The result generated by Stoxo:<\/p>\n\n\n\n

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Stoxo has successfully generated insights on Infosys\u2019 income statement. It provides insights into how the revenue and net profits have increased. <\/p>\n\n\n\n

Balance Sheet: Assets, Liabilities, Equity<\/strong><\/h3>\n\n\n\n

A balance sheet is an official summary that displays a company\u2019s financial position on a particular date. This statement details the value of assets, liabilities, and equities held by the company over time. Analysing this information is crucial in determining the stock\u2019s intrinsic value.<\/p>\n\n\n\n

For example, fundamental analysis utilises metrics such as current ratio, leverage ratio, and debt-to-equity ratio, among others, to understand where the company stands. These ratios are crucial as they reveal a company\u2019s financial standing and stability. <\/p>\n\n\n\n

Let\u2019s see how Stoxo would analyse Infosys\u2019 FY25 balance sheet.<\/p>\n\n\n\n

Using a customised prompt, ask Stoxo to perform fundamental analysis on Infosys\u2019s FY25 Balance Sheet. <\/p>\n\n\n\n

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Stoxo then provides insights on key metrics of the balance sheet:<\/p>\n\n\n\n

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Stoxo presents an insightful summary of how Infosys\u2019 balance sheet displays robust liquidity, zero debt, and consistency in profits. <\/p>\n\n\n\n

Cash Flow Statement: Free Cash Flow<\/strong><\/h3>\n\n\n\n

Cash flow statements provide detailed insights into a company\u2019s monetary movements in a particular time period. These monetary movements are segregated into operating, investing, and financing activities. For fundamental analysis, investors focus on free cash flow, which is the remaining cash balance after paying for all operating and capital expenditures. <\/p>\n\n\n\n

For instance, a positive free cash flow implies that the company can generate a cash surplus after deducting capital expenditures and operational expenses.<\/p>\n\n\n\n

Let\u2019s check out how Stoxo generates a fundamental analysis report for Infosys\u2019 cash flow statements for FY25. After inputting a prompt to conduct a fundamental analysis on the cash flow statements, Stoxo generates the following output:<\/p>\n\n\n\n

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This helps users understand the importance of increasing levels of free cash flow in a company. <\/p>\n\n\n\n

Key Financial Ratios & Metrics<\/strong><\/h2>\n\n\n\n

Financial ratios and metrics are crucial in determining the company\u2019s comprehensive financial health. <\/p>\n\n\n\n

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  1. P\/E, P\/S, EV\/EBITDA<\/strong>
    <\/strong><\/li>\n<\/ol>\n\n\n\n

    The price-to-earnings ratio<\/a> is an estimate of investors\u2019 willingness to pay per unit of earnings of the share. <\/p>\n\n\n\n

    P\/E= Price of the share\/ Earnings per share<\/em><\/strong><\/p>\n\n\n\n

    The <\/strong>Price-to-sales ratio illustrates how much investors are willing to pay per unit sales of the company.<\/p>\n\n\n\n

    P\/S= Price of the share\/Sales per share<\/strong><\/p>\n\n\n\n

    The EV\/EBITDA<\/a> ratio is used to evaluate the company\u2019s overall value in comparison with its earnings.

    EV\/EBITDA = Enterprise value\/ Earnings Before Interest, Taxes, Depreciation & Amortisation<\/strong><\/p>\n\n\n\n

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    1. ROE, Current Ratio, D\/E, Profit Margins<\/strong><\/li>\n<\/ol>\n\n\n\n