Earnings Calendar (22Dec25)
With Christmas approaching, there will be fewer earnings in the coming week.
Without any personal earnings at stake, I will share how I quantify business.
How to conduct fundamental analysis
To qualify an investment business, I utilise a fundamental analysis approach that focuses on long-term performance and financial health. I typically review 10 years of data to evaluate how a company builds resilience and recovers during economic downturns.
Here is the framework I use to group and analyse key metrics:
1. Income Statement & Growth
I look for consistent upward trends in the following areas:
-
Revenue & Net Profit: Steady growth in both. For startups, I look for a clear trend of reducing losses.
-
Earnings Per Share (EPS): Evidence of growing shareholder value over time.
-
Dividends: If the company pays dividends, I look for a consistent or increasing Dividend Per Share (DPS).
-
Profitability Margins: I analyse both Gross and Net Profit Margins to ensure the business is operating efficiently.
2. Balance Sheet & Cash Flow
A healthy company must demonstrate stability through its internal finances:
-
Balance Sheet: I look for increasing net assets, growing retained earnings, and well-managed liabilities.
-
Cash Flow: The most critical indicators are Cash Flow from Operations and Free Cash Flow.
-
Core Business Integrity: I am cautious if a company’s profits come primarily from secondary investments or non-core activities rather than its primary business operations.
3. Industry Benchmarking & Valuation
Numbers are most meaningful when compared to the broader market:
-
Comparative Analysis: I compare a company’s performance against direct competitors (e.g., comparing FedEx with UPS or DHL) while accounting for specific service differences like integrated logistics.
-
P/E Ratio: I use the Price-to-Earnings ratio to see how the company’s valuation stands against the industry average.
-
Margin of Safety: Before investing, I calculate a target price that includes a “Margin of Safety” to protect against market volatility.
4. Qualitative Factors
Once the quantitative data is verified, I apply two final filters:
-
Economic Moat: I assess the company’s competitive advantage—its “moat”—to determine if its market position is sustainable.
-
Circle of Competence: I only invest in sectors I thoroughly understand. If a business falls outside my area of expertise, I prefer to stay away.
Hopefully, this checklist can be helpful in this investment journey. Wishing all great success in 2026. (Content is from me, image is generated by Gemini.)
Comments