What distinguishes fundamental analysis from technical analysis?

Fundamental analysis is distinguished by its emphasis on evaluating a company's financial health and performance. This approach involves examining key financial metrics such as earnings, revenue, profit margins, and overall economic conditions to determine the intrinsic value of a security. Investors who utilize fundamental analysis seek to understand the underlying factors that can influence a company's performance over the long term, including management effectiveness, market position, and competitive advantages.

In contrast, other approaches, such as technical analysis, focus primarily on price movements and trading patterns rather than the company's fundamentals. Technical analysis utilizes stock price data and volume over time to identify trends and make investment decisions, without considering the financial statements or the underlying health of the company itself. Therefore, the essence of fundamental analysis lies in its comprehensive examination of financial performance, which is not a characteristic of technical analysis.