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Valuing equity securities using fundamental analysis: Evidence from international stock markets

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  • Samuel Tabot Enow

    (Research associate, IIE Varsity college, 12 Radar, 4051 Durban, South Africa)

Abstract

To date, there are many myths surrounding security selection and fundamental analysis due to the notion that all available information is perfectly priced in security. However, fundamental analysis is still very useful in determining the financial health of security, which is much needed for long-term investing. The aim of this study was to perform a valuation analysis of international stock markets so as to recommend buy or sell signals suitable for investment decisions. This study made use of the coefficients of a multiple regression analysis and value drivers for the S&P 500, Nasdaq, JSE, DAX, Nikkei 225, BIST 100, FTSE, and SSE as of January 23, 2023. The findings revealed that the JSE, DAX, Nikkei 225, and FTSE are undervalued, which translates to a buy signal, while the S&P 500, Nasdaq, BIST 100, and SSE are overvalued. These findings imply that investing in the JSE, DAX, Nikkei 225, and FTSE will produce decent capital gains on a risk-adjusted basis. Key Words:Fundamental analysis, Value drivers, Stock markets, Earnings yield, Price earnings ratio, Book value

Suggested Citation

  • Samuel Tabot Enow, 2023. "Valuing equity securities using fundamental analysis: Evidence from international stock markets," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 12(6), pages 153-158, September.
    • Handle: RePEc:rbs:ijbrss:v:12:y:2023:i:6:p:153-158
    DOI: 10.20525/ijrbs.v12i6.2644
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