Fundamental stock analysis: a beginner's guide

The four lenses

Every serious stock analysis answers four questions in order. Skip one and you're guessing.

• Business quality — what does the company sell, to whom, and why can't competitors copy it?
• Financial health — does it generate cash, and can it survive a bad year?
• Valuation — what is a fair price range given realistic growth and margins?
• Risk — what could permanently impair the thesis (regulation, disruption, balance sheet)?

A repeatable workflow

Open the 10-K, read the business description and risk factors first. Then pull five years of revenue, gross margin, operating margin, free cash flow and net debt into a single view. Most analysts spend 80% of their time here — Edge Trader Terminal collapses it into one screen.

Once the picture is clear, build a simple valuation range using two methods (e.g. DCF and EV/EBITDA against peers). If they disagree by more than 30%, your assumptions are doing the talking — not the data.

Where AI helps

AI is excellent at the boring 80%: summarizing filings, extracting guidance changes from earnings transcripts, and surfacing peer comparisons. It is bad at judgment — moats, management quality, and whether a thesis is reasonable. Use it to compress research time, not to replace the decision.