Learn how to succeed in Stock Markets with fundamental analysis for stocks and indices

Do you want to know more about stocks trading and fundamental analysis of stocks? Watch our latest video to find out more about the fundamental analysis for stocks and indices and get profitable trading results.

What are earnings estimates – A simple explanation

Fundamentals for stocks and indices differ very drastically, but there are a handful of common themes that you will see. For example, stocks have some very basic fundamentals, such as earnings estimates and of course actual earnings. After all, the stock valuation and pricing is a reflection of how a company is performing. The higher the profits and earnings, the higher the stock price typically. However, there are some other things that can come and play, such as the ability to sell debt, or perhaps something along the lines of a CEO change at the company and whether or not the market is confident with the new leadership.

Fundamentals in indices are a little bit more varied, but there are a handful of them that people typically pay attention to. One such fundamental to a countries index is GDP. Gross domestic product is the value of an entire economy for lack of a better term. Obviously, the better the GDP is growing, the better that the stock market should as well. You also have other things such as interest rates they come into play. Or more specifically, interest-rate expectations. The central bank is looking to raise interest rates, typically it works against the value of a stock market. Also, exports can greatly influence an index, especially in certain countries such as Japan. The Japanese after all have an export driven economy, so the more exporting they do, the better off the Nikkei 225 should be. On top of that, currency can also come into play for export economies as a strong currency can often shrink the ability to sell worldwide.

Regardless, you have to keep in mind that most of which are looking at is the state of either the financial balance sheet of a company, or the overall economy of a nation. As a general rule, the higher things go numerically, the higher the index will.