Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)


Fundamental Analysis from Value Drivers: The Case of Banking, Industrial, Consumer Goods, Healthcare and Tech Firms Listed on the Johannesburg Stock Exchange

Author(s): Enow Samuel Tabot

Fundamental trends usually drive the market price of a stock. A healthy and good security is usually reflected in its fundamentals and can be used to provide the direction of trade for investors and investment practitioners. Fundamental drivers can last for years and at times minutes. The purpose of this study was to use fundamental value drivers to provide signals for stocks in the banking, industrial, consumer goods, healthcare and technology firms listed on the Johannesburg stock exchange (JSE). Using a sample of 56 firms from different sectors and a multiple regression analysis, the findings reveals that 50% of the largest 10 firms in the banking sector according to market capitalisation are undervalued. In the industrial sector, 44% of the largest 14 firms where undervalued. Furthermore, only 36% of the 14 largest firms in the consumer goods sector are undervalued while 44% and 45% of the largest 9 and 11 firms in the healthcare and Tech firms respectively listed in the JSE are undervalued. These findings can be used to provide suitable investment strategies for investors and industry practitioners.

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