Fundamental analysis of stock a methods which is employed to determine the value of a stock. In fundamental analysis the industry to which the stock is related is analyzed. This is done by analyzing the financial statements of the company. This approach usually looks at the overall health of the economy in which that industry is operating. In fundamental analysis there are again two approaches used to analyze the industry under study. One approach is zooming in or top down analysis and the other is known as zoom out or bottom up analysis. This analysis should not be mixed with technical analysis or quantitative analysis.

Fundamental analysis is based on the assumption that markets do not reflect all the available information in the stock prices of different companies. For that matter there must be correction seen in each of these stocks after some time and who so ever positions himself in time would get benefit from that correction. Top down or zoom in approach mainly focuses first on the national or international economies health. Then they relate economic performance with that of the industry and then they go to the specifics of the firm under consideration. For the bottom up method, approach is totally inverse to that of the top down approach. In this method the analyst starts from the firm (no matter how small is the size of the firm) and goes up to study the industrial and then economic factors that are affecting the firms performance.