How to perform fundamental analysis

Do not start with ratios. Map who pays, why, how much, how often and which costs rise with each customer.

Express the driver mathematically—customers times average revenue, stores times sales per store—so narrative can be tested.

A moat is a mechanism that protects returns: switching costs, networks, scale, pricing power, scarce assets or lower cost.

Look for retention, incremental margin, acquisition cost and ROIC, then try to break the thesis with regulation or technology.

Rebuild the income statement as a staircase from revenue to gross profit, EBIT, net income and diluted EPS.

Decompose change into volume, price, mix, acquisitions and FX. Adjusted figures are useful only when they do not erase recurring costs.

The balance sheet asks whether the company can wait. Classify assets by real convertibility and liabilities by maturity.

Go beyond net debt: map maturity, rate, interest, covenants and leases, then stress revenue and margin.

Connect earnings to cash by reconciling non-cash charges, working capital and capex across several years.

Separate maintenance and growth capex and include stock compensation and acquisitions in the economic cost.

Valuation turns assumptions into a range. Project revenue drivers, margins, dilution and net debt, then choose a coherent DCF or multiple.

Three scenarios should expose downside, annualised return and key sensitivities—not just a central target.

The final thesis should fit on one page and be falsifiable. Include mechanism, market disagreement, valuation, risks, metrics and dates.

Updating does not mean moving a target to preserve a recommendation. Version changes and abandon a thesis when its central mechanism fails.