Fundamental analysis for momentum traders is easier with the new Fundamentals page for thinkorswim®.
If you’re wondering which company fundamentals might help you as a trader, wonder no more. With the Fundamentals page on the thinkorswim® platform from TD Ameritrade, you can dial in on the numbers that matter most before you check your charts.
Despite what you may be thinking, fundamentals matter—even to traders. And thinkorswim has taken a leap forward by integrating the grand tradition of fundamental analytics alongside existing probability and technical analysis tools, making the platform more useful to traders than ever. In a word, the new Fundamentals tab brings to the table a company’s traditional “tear-sheet” data points, including price-to-earnings ratios, as well as other unique functions. Here’s a rundown of what you’ll find.
FIGURE 1: FUNDAMENTALS AT A GLANCE. With everything from a companys hard numbers to its individual business units, find the Fundamentals page under the Analyze Tab on thinkorswim?. For illustrative purposes only.
If you don’t enter a symbol, the page will load the major industry sectors to start you off. Select a particular industry, and its listed securities are displayed. Click on any of these symbols to load the information on a particular security. This is a good way to do a quick market browse or to compare companies in similar industries.
When you select a company, either directly with the symbol selector or from an industry list, the platform loads the security into the tool. The tool’s primary section, “By the Numbers,” displays a tear sheet with a company’s core fundamentals, including both annualized and per-quarter historic views—per-share earnings and dividends, return on equity or assets, tax rates, profit margins, asset turnover, and more.
You’ll be able to study a number of valuation, activity, and financial ratios that illustrate the performance of the company over time. You can access this information at a glance by year or quarter using the switch at the top of the page.
Further down the Fundamentals page, you’ll find some granular details about the divisions within a company from the Company Profile tool, whose functionality has been expanded. (If you’re already familiar with the Company Profile tool, don’t worry; the tool you know and love is still on the All Products page, but has been expanded in the context of the Fundamentals tab as well.)
FIGURE 2: THE COMPANY PROFILE TOOL. Studying a companys business divisions can tell a story
you may not have heard. Just type in a symbol and click a business division in the left bar. Select a forecast
measure in the right column and view the data. Or slide the levers to see what your forecasts will
reveal. For illustrative purposes only.
The revenue and market cap (capitalization) visualization is likewise displayed next to price projections calculated by Trefis® researchers, as well as any custom projection you might make. Click a revenue stream to view its components’ forecasts. If you select individual forecasts, you can adjust the graph charting that element’s expectation to match your projections.
For you Company Profile veterans, a number of new revenue parameters have been added for an in-depth analysis of each division (click on the Division Overview tab at the top right).
Finally, overall company analyst reports and each of a firm’s major business lines are also available on the Company Details screen. Much like the All Products tab, you can individually activate or arrange the Fundamentals tab’s components using the wrench button at the top right. This tab delivers vital corporate reporting data to jump-start your research for a potential trading vehicle, as well as help you make better-informed projections.
On the surface, fundamental analysis appears to be a logical tool for constructing a long-term stock portfolio. However, for traders, it may not be a company’s financial numbers that matter right now so much as the perception of what those numbers might mean for the future. After all, why bother projecting a five-year growth rate when you may only care about what the stock is going to do tomorrow, next week or next month?
But let’s look at this through a different lens. When you’re trading shortterm momentum, certain company fundamentals can help. Here are a couple of ways you might be able to use fundamentals using the Company Profile tool in thinkorswim:
Say you discover an exciting new product or industry (think smartphones or solar). You research companies that make these products and zero in on one of them as a contender to trade. The charts seem to indicate that the time is right for entry, so you pull the trigger— only to learn that the company division that makes the product adds only 3% to the overall bottom line! In this scenario, the tool can help you evaluate your assumptions. It can help you better understand how much revenue is attributable to the bottom line from the company’s combined revenue drivers.
In longer-term position trades, the tool lets you compare “generals to soldiers.” First-tier companies (generals) that serve as sector proxies tend to have lower volatility and might not offer the ideal opportunity. However, if you’re anxious to be in a sector, you might look for the second- and third-tier companies (soldiers) that have room to grow. Do they have similar business units as the generals, and a similar makeup of those units? Are the growth projections for those units what you’d expect? The tool is your secret weapon to help keep you armed and battle ready.
With so much great technology in the trading world these days, the idea of market research and informed decisions no longer need provoke anxiety attacks and extreme dread. Think of the new Fundamentals page and its company profile tool as the Cliffs Notes of the trading world—information that can easily turn you into a “trading fundamentalist.” You’ll save yourself countless hours wading through beefy analyst reports, and quickly get the insights you need on a whole lot of companies whose products and services could make you want to profile with joy.
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Financial Communications Society 2016
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