Q15: What is Fundamental Analysis? How to use it?

A: Fundamental Analysis is an interactive valuation calculator that provides a 6-month price target for stocks specified by the user, developed with the prevailing valuation methodologies utilized by Wall Street firms. The valuation is based on over a dozen fundamental variables that influence the stock price, including interest rates and cash flow information. While some of the parameters are set by historical data, the user has the option of modifying five important underlying variables: the long-bond rate, inflation rate, P/E, sales per share, and 1-year DJI outlook, the measurement of market sentiment.

To use this model, the user first needs to type a symbol in the textbox on the upper-left corner and hit 'Go'; then, the five modifiable parameters are loaded from database. After the user changes the parameters and hits the 'Calculate' button, a 6-month target price will be generated, along with an opinion on the value of the stock compared against the S&P 500 index.