Block 04 · 01
Fundamental Analysis: What to Buy
How official filings reveal which business deserves your capital: revenue, margins, EPS, and P/E.
Below are the year's figures. Open “What is this?” under any of them if the wording is new, and see how separate numbers add up to an assessment.
Revenue
$18.4B
+21%
Good signal
Sales grow clearly faster than inflation.
Profit
$3.8B
+31%
Good signal
Profit grows faster than revenue — costs are under control.
Operating Margin
24%
20% → 24%
Good signal
More of each revenue dollar stays with the company than a year ago.
Debt
$3.2B
Needs a look
The debt figure alone proves nothing: compare it with cash and profit.
Cash
$8.7B
Good signal
Cash exceeds debt, which is supportive context.
Industry Growth
+8%
vs +21%
Good signal
The company grows significantly faster than its industry.
Preliminary assessment
A green signal does not mean “buy” — it means this item raises no questions.
This is only the first level of analysis. A single indicator is not enough for an investment decision.
In plain words
An investor reads a chipmaker's quarterly report: revenue is up 34% year over year, margins hold above 50%, capacity is expanding, and debt is low. The fundamentals check out — the asset joins the short list. It's like inspecting a restaurant's kitchen and order book before buying a stake: first you confirm the business works, only then do you discuss the entry price.
Fundamental analysis is about the business itself.
Imagine buying a stake in a coffee shop. You check how much it earns per month, whether revenue is growing, what's left after expenses, and whether it carries heavy debt. With a public company it's the same, except the numbers are official and come out once a quarter.
The key things to check: revenue is growing, the company is profitable, debt is moderate, and the share price is reasonable relative to earnings. If the business is strong, the asset makes your list.
When exactly to buy is a different question. Timing belongs to technical analysis — that's the next lesson.
Common beginner mistakes
- Looking at P/E without comparing it to the sector
- Judging a company on a single quarter instead of the trend
- Ignoring debt load behind attractive revenue
- Expecting fundamentals to give an entry point — they only answer 'what'