Which method is used in Fundamental Analysis to evaluate stocks?

Fundamental analysis is a method used to evaluate stocks by examining a company's financial health and performance metrics. This approach focuses on specific financial ratios such as earnings per share (EPS), price-to-earnings (P/E) ratio, return on equity (ROE), and other key performance indicators like revenue growth and profit margins. By analyzing these metrics, investors can gain insights into a company’s profitability, operational efficiency, and overall financial stability, which ultimately aids in determining the stock's intrinsic value.

When assessing stocks through fundamental analysis, the goal is to establish whether the current stock price reflects the company's true value. If the stock is undervalued, it may present a good buying opportunity; if overvalued, it might be better to consider selling.

The other choices focus on different aspects that are not foundational to fundamental analysis. Market trends and speculation deal more with macroeconomic factors and market psychology; technical indicators rely on historical price patterns and trading volume rather than a company's financial data; and investor sentiment reflects the emotions and opinions of market participants, which can be influenced by news and broader economic conditions. These methods are more aligned with technical analysis and behavioral finance rather than the core principles of fundamental analysis, which are firmly rooted in financial metrics and ratios.