With all the three steps involved in the process, this particular analysis is also referred as three-step or top-down approach.
So, the steps and their influence have been detailed for your ready reference that might enable your learning as to which factors you should take account of.
Market or Macreconomic analysis casting influence on company stock: Fiscal and monetary policy announced from time to time in an economy together with external or precisely international factors such as political turmoil or volatility in the foreign exchange market pose a threat and creates an environment of uncertainty in respect of the sales and earnings of a company. And an industry or a company is not left unaffected by the macroeconomic issues, so an investor also needs to review the current economic situation before plunging their hard money in equities. Any likely anticipation in view of the economy shall also hold favourable for the investor.
Industry analysis: Before heading for the company analysis of the particular stock that you have zeroed on, industry analysis which determines the performance of an industry in the long term or forthcoming time. As prospects of the industry shall have a bearing on the performance of the company in the global business environment. So, even if a company fairs well within a industry facing downturn, the particular company stock shall not be a good bet.
Company analysis: For company analysis, companies within an industry can be compared by comparing financial data using cash flow data or financial ratios. And, zeroing-in on a good stock can be done by determining the past as well as future prospects of the company. And, accordingly the valuation has to be determined.
And thereafter after comparing the intrinsic value of the share with the price of the stock, you can decide on whether the investment can be prove to be good or not.