Fundamental and statistical analysis method - Explained

13 feb 2022

Hi All,

I have been asked by few in comments and personally to post fundamental analysis of few other companies in similar way as that of FB and PYPL (as per linked ideas). Since, I will not be able to take all the requests, I thought I will make a video explaining how to do it yourself :)

⬜ Following things are discussed in the video

🎲 Earnings
Not significant unless the gap is too much. Things to look for are:

• If the recent earnings and revenue has met expectation/estimation
  
• If the next earning/revenue estimates are higher/lower than current one.
  
• Cyclical nature of quarterly earnings - check results and estimations of last two years of same quarter
  

🎲 Quality
Can use open source script Quality-Screen from community library.

• Color coded based on standards and very generic method.
  
• May also need to consider that some of these stats may be industry and sector based and may require comparison among similar stocks.
  
• Overall - if green/lime good, if lots of red/orange - bad. Silver - in between.
  

🎲 Relative Growth
Can use open source script Relative-Growth-Screen from community library.

• Applies Bollinger bands/ Keltener channel to define whether they are relatively high or low. Can also use RSI - but, have not tried :)
  
• Measures growth over past few years.
  

🎲 Drawdown from ATH
Price drawdown from ATH and historical drawdown levels. Can use open source script Drawdown-Range from community library.

• Tells what is the current price drawdown from ATH.
  
• Provides details on historical drawdown levels and ranges.
  

🎲 Drawdown comparison - price vs fundamentals
Percentile-Price-vs-Fundamentals is the utility I built to carry out the comparison. I am not sure if there are any other comparable tools. Tool is useful for comparing if price drawdown is justified with the drop of fundamentals or if this is an overreaction.

⬜ Please note
▶ News events and probability of future potentials are not taken into consideration. Objective here is to work solely based on the readily available stats.
▶ It is unreliable use this method for short term trading as we cannot be sure when the things going to price in or if they have already priced in.
▶ Not a financial advise. Just an idea based on the research I have done so far. Constructive criticism welcome. Happy to learn from others.