Data & Analysis Stocks, Crypto, DeFi
Fundamental Analysis
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This skill evaluates the intrinsic value of equities and crypto assets by analyzing financial statements, valuation ratios, tokenomics, macroeconomic context, and protocol-level metrics. It answers the question: “Is this asset cheap, fairly priced, or expensive relative to its fundamentals?” Fundamental analysis provides the conviction layer — technical analysis times the entry, but fundamentals determine whether the asset is worth owning at all.
When to Use This Skill
- When evaluating whether to invest in a stock or crypto asset
- When comparing multiple assets in the same sector or category
- Before earnings announcements to assess expected impact
- When analyzing tokenomics of a new crypto project
- When assessing macro conditions that affect portfolio allocation
- When building a DCF or relative valuation model
- When evaluating protocol revenue and usage metrics for DeFi tokens
- When deciding sector allocation based on macro environment
- When a position has moved significantly and you need to reassess fair value
What This Skill Does
- Equity Valuation: Calculates P/E, P/S, P/B, PEG, EV/EBITDA, and DCF fair value estimates
- Crypto Fundamental Assessment: Analyzes tokenomics, protocol revenue, active users, developer activity, and governance
- Macro Context Analysis: Evaluates interest rates, inflation, USD strength, and yield curve impact on asset classes
- Sector Analysis: Determines how different sectors respond to current macro regime
- Earnings Analysis: Assesses EPS beats/misses, revenue growth trends, guidance quality, and forward estimates
- Comparable Analysis: Ranks assets against sector peers using standardized metrics
- Valuation Verdict: Produces an undervalued/fair/overvalued rating with confidence level and price target range
How to Use
Equity Valuation
Run fundamental analysis on AAPLWhat is the fair value of NVDA using DCF and comparable analysis?Crypto Fundamentals
Analyze the tokenomics and fundamentals of ETHCompare L1 fundamentals: ETH vs SOL vs AVAXMacro Context
How do current macro conditions affect tech stocks and crypto?Earnings Analysis
Analyze MSFT earnings: did they beat expectations? What does guidance look like?Data Sources
With MCP/CLI tools connected:
- yFinance MCPs (tooyipjee, maxscheijen, Adity-star) — Financial statements, earnings data, valuation ratios, historical prices
- Financial Reports MCP — SEC filings, 10-K, 10-Q, earnings transcripts
- OpenBB CLI — Comprehensive financial data, screening, economic calendar
- CoinGecko MCP / CoinGecko Price MCP — Token metrics, market cap, FDV, supply data, volume
- DeFiLlama — Protocol TVL, revenue, fees, user counts, chain comparisons
- Token Terminal (via web fetch) — Protocol revenue, P/F ratios, developer activity
- Messari (via web fetch) — Token profiles, governance, tokenomics breakdowns
- FRED / economic data (via OpenBB) — Interest rates, CPI, GDP, unemployment
Without tool access: Ask the user to provide:
- Financial statements (income statement, balance sheet, cash flow) or key metrics
- Current price, market cap, and shares outstanding (or token supply)
- Sector and peer company/protocol names for comparables
- Recent earnings results and guidance (if applicable)
- Token supply schedule, unlock dates, and burn mechanisms (for crypto)
- Current macro data: Fed funds rate, CPI, 10Y yield
Proceed with analysis using provided data. Note which inputs are sourced vs. estimated.
Methodology
Step 1: Asset Classification and Framework Selection
Before running any numbers, classify the asset to determine which valuation framework applies:
ASSET TYPE ROUTING
Equity (stock)
├── Growth stock (revenue growth >20% YoY) → P/S, PEG, DCF with high growth assumptions
├── Value stock (P/E < sector median, low growth) → P/E, P/B, EV/EBITDA, dividend yield
├── GARP (growth at reasonable price) → PEG, EV/EBITDA, DCF
└── Pre-profit / IPO → P/S, revenue multiple, TAM analysis
Crypto
├── L1 blockchain (ETH, SOL, AVAX) → FDV/Revenue, active addresses, dev activity, fee revenue
├── DeFi protocol (AAVE, UNI, MKR) → P/F ratio, TVL, revenue/fees, token buybacks
├── Infrastructure (LINK, GRT, FIL) → Usage metrics, integration count, revenue
└── Meme / community token → NOT suitable for fundamental analysis (see memecoin-trading)Step 2: Equity Valuation Ratios
Calculate and interpret the core valuation multiples:
Price-to-Earnings (P/E)
P/E = Share Price / Earnings Per Share (EPS)
Forward P/E = Share Price / Estimated Next-12-Month EPS
Interpretation:
P/E < 10 → Potentially undervalued OR earnings declining
P/E 10-20 → Fair range for mature companies
P/E 20-40 → Growth premium — justified only if growth supports it
P/E > 40 → Expensive — needs exceptional growth to justify
P/E negative → Unprofitable — use P/S instead
CRITICAL: Always compare P/E to:
1. Company's own 5-year average P/E
2. Sector median P/E
3. Growth rate (via PEG ratio)Price-to-Sales (P/S)
P/S = Market Cap / Annual Revenue
EV/Revenue = Enterprise Value / Annual Revenue
Useful when: Company is unprofitable or has volatile earnings
Interpretation by sector:
SaaS / cloud software: 3-15x revenue (high gross margins justify premium)
Hardware / manufacturing: 0.5-3x revenue
Retail / e-commerce: 0.5-2x revenue
Biotech (pre-revenue): Based on TAM and pipeline probabilityPrice-to-Book (P/B)
P/B = Share Price / Book Value Per Share
Book Value = Total Assets - Total Liabilities
Interpretation:
P/B < 1.0 → Trading below liquidation value — deep value or value trap
P/B 1-3 → Normal range for most companies
P/B > 5 → Asset-light business or significant intangibles
Most useful for: Banks, insurance, REITs, asset-heavy businesses
Less useful for: Tech, SaaS, biotech (intangible assets dominate)PEG Ratio
PEG = P/E / Annual EPS Growth Rate (%)
Example:
P/E = 30, EPS growth = 25%
PEG = 30 / 25 = 1.2
Interpretation:
PEG < 1.0 → Undervalued relative to growth (the sweet spot)
PEG 1.0-1.5 → Fairly valued
PEG 1.5-2.0 → Getting expensive
PEG > 2.0 → Growth premium is stretched
WARNING: PEG is only meaningful when growth is positive and sustainable.
Do NOT use PEG for cyclical companies or one-time growth spikes.EV/EBITDA
Enterprise Value = Market Cap + Total Debt - Cash
EBITDA = Operating Income + Depreciation + Amortization
EV/EBITDA = Enterprise Value / EBITDA
Interpretation by sector:
Tech: 12-25x (capital-light)
Industrial: 6-12x
Energy: 4-8x
Utilities: 8-12x (stable cash flows)
Consumer staples: 10-15x
Advantage over P/E: Capital structure-neutral, ignores tax differences
Best for: Comparing companies with different debt levels or in M&A analysisStep 3: Discounted Cash Flow (DCF) Modeling
DCF is the gold standard for intrinsic value. Build a simplified model:
STEP-BY-STEP DCF
1. PROJECT FREE CASH FLOW (FCF) for 5-10 years
FCF = Operating Cash Flow - Capital Expenditures
Year 1-3: Use analyst consensus or recent growth rate
Year 4-7: Taper growth toward sector average
Year 8-10: Taper toward GDP growth rate (2-3%)
2. CALCULATE TERMINAL VALUE
Terminal Value = FCF_final × (1 + terminal_growth) / (discount_rate - terminal_growth)
Terminal growth rate: 2-3% (never above long-term GDP growth)
3. DISCOUNT TO PRESENT VALUE
PV = Σ [FCF_t / (1 + r)^t] + [Terminal Value / (1 + r)^n]
Discount rate (r):
WACC for equities (typically 8-12%)
Higher for crypto (15-25% to reflect risk)
4. CALCULATE PER-SHARE VALUE
Intrinsic Value = Total PV / Shares Outstanding
Margin of Safety = (Intrinsic Value - Current Price) / Intrinsic Value
DECISION FRAMEWORK:
Margin of Safety > 30% → Strong buy signal
Margin of Safety 10-30% → Moderate buy signal
Margin of Safety 0-10% → Fairly valued, wait for better entry
Margin of Safety < 0% → Overvalued, avoid or consider shortDCF Sensitivity Table (always provide):
Example: NVDA DCF sensitivity (price per share)
Terminal Growth Rate
Discount Rate 1.5% 2.0% 2.5% 3.0%
8% $185 $210 $245 $295
9% $155 $175 $200 $235
10% $135 $150 $170 $195
11% $118 $130 $148 $168
12% $105 $115 $130 $148
Current price: $140 → Fair value at 10% / 2.5% = $170 (18% upside)Step 4: Crypto Fundamental Analysis
Crypto assets require a different framework since most do not have traditional financial statements.
Tokenomics Analysis
SUPPLY ANALYSIS
Total Supply: Maximum tokens that will ever exist
Circulating Supply: Tokens currently in circulation
FDV: Fully Diluted Valuation = Total Supply × Price
Market Cap: Circulating Supply × Price
FDV/MCap Ratio: If > 3x, significant dilution risk from unlocks
SUPPLY SCHEDULE CHECKS:
- Cliff unlocks: Large token releases on specific dates (bearish events)
- Vesting schedule: Monthly/quarterly team/investor unlocks
- Inflation rate: Annual new supply creation (staking rewards, mining)
- Burn mechanism: Does the protocol burn tokens? (ETH EIP-1559, BNB quarterly burns)
- Net emission: Inflation rate minus burn rate = actual dilution
RED FLAGS:
- FDV/MCap > 5x → Massive future dilution
- Team/VC allocation > 40% → Insider-heavy distribution
- No cliff passed yet → Selling pressure incoming
- Unclear or modifiable supply → Governance riskProtocol Revenue and Usage
REVENUE METRICS (from DeFiLlama / Token Terminal)
Fees/day: Total fees generated by the protocol
Revenue/day: Fees that accrue to token holders (after expenses)
P/F Ratio: FDV / Annualized Fees (like P/S for crypto)
P/Revenue Ratio: FDV / Annualized Revenue to token holders
USAGE METRICS
Daily Active Addresses: Unique wallets interacting with protocol
Transaction Count: Daily transactions on the network
TVL (Total Value Locked): Capital deposited in DeFi protocols
TVL/MCap Ratio: If > 1.0, more value locked than market cap (potentially undervalued)
DEVELOPER ACTIVITY (from GitHub / Electric Capital)
Active developers: Monthly unique contributors
Commit frequency: Code commits per week
Ecosystem projects: Number of projects building on the protocol
GROWTH RATES: Calculate 30d, 90d, 180d growth for all metrics above.
Accelerating metrics = bullish; decelerating = bearish.Crypto Comparable Analysis
L1 BLOCKCHAIN COMPARISON TABLE
Metric | ETH | SOL | AVAX | Interpretation
----------------|----------|----------|----------|----------------
FDV | $400B | $80B | $15B | Scale context
Fees/day | $8M | $500K | $100K | Revenue generation
P/F Ratio | 137x | 438x | 411x | ETH cheapest on fees
Active Addr/day | 500K | 1.2M | 50K | SOL leads usage
Dev Count | 2,500 | 1,200 | 400 | ETH leads dev activity
TVL | $60B | $8B | $1.2B | ETH dominates TVL
DEFI PROTOCOL COMPARISON TABLE
Metric | AAVE | MKR | UNI | Interpretation
----------------|----------|----------|----------|----------------
FDV | $2B | $2.5B | $6B | UNI premium
Revenue/day | $800K | $500K | $2M | UNI leads
P/Revenue | 6.8x | 13.7x | 8.2x | AAVE cheapest
TVL | $12B | $8B | $5B | AAVE leads
Token Accrual | Yes | Yes | No | UNI lacks accrual mechanismStep 5: Macro Context Analysis
Macro conditions directly affect asset valuations. Assess the current regime:
MACRO REGIME CLASSIFICATION
Rate Environment:
Rising rates → Negative for growth/tech, positive for banks, negative for crypto
Stable rates → Neutral, focus on earnings
Falling rates → Positive for growth/tech, positive for crypto, negative for USD
Inflation:
High (>4%) → Commodities, energy, TIPS, real assets benefit
Moderate (2-4%) → Goldilocks for equities
Low (<2%) → Growth stocks benefit, deflationary risk
USD Strength:
Strong USD → Negative for crypto, negative for international earnings
Weak USD → Positive for crypto, positive for commodities, EM equities
Yield Curve:
Normal (10Y > 2Y) → Healthy economy, favor cyclicals
Flat → Late cycle, favor defensive
Inverted (2Y > 10Y) → Recession signal (12-18 month lead), favor cash and qualitySector Rotation Framework:
| Economic Phase | Leading Sectors | Lagging Sectors | Crypto Impact |
|---|---|---|---|
| Early expansion | Tech, consumer discretionary, small caps | Utilities, staples | Bullish (risk-on) |
| Mid expansion | Industrials, materials, financials | Defensive | Moderately bullish |
| Late expansion | Energy, materials, healthcare | Tech, growth | Volatile, selective |
| Contraction | Utilities, staples, healthcare, cash | Cyclicals | Bearish (risk-off) |
| Recovery | Financials, real estate, tech | Staples | Strongly bullish |
Step 6: Earnings Analysis Framework
For publicly traded companies, earnings are the primary valuation driver:
EARNINGS ASSESSMENT CHECKLIST
1. BEAT/MISS ANALYSIS
EPS beat/miss: Actual EPS vs. consensus estimate (% surprise)
Revenue beat/miss: Actual revenue vs. consensus
Whisper number: Unofficial "real" expectation (often higher than consensus)
Strong beat: EPS >5% above consensus AND revenue beat
Weak beat: EPS beat but revenue miss (accounting-driven, less bullish)
Quality miss: Revenue miss but strong guidance (forward-looking)
Bad miss: Both miss with lowered guidance (bearish)
2. REVENUE QUALITY
Organic growth rate: Revenue growth excluding acquisitions
Recurring revenue %: SaaS → ARR/MRR growth, retention rates
Customer growth: Net new customers or subscriber adds
ARPU trend: Revenue per user — expanding or contracting?
Geographic mix: Diversified or concentrated?
3. MARGIN ANALYSIS
Gross margin trend: Expanding → pricing power; Contracting → cost pressure
Operating margin: Improving → operational leverage; Declining → SGA bloat
FCF margin: Cash generation relative to revenue
4. GUIDANCE IMPACT
Raised guidance: Management confident → bullish signal
Maintained guidance: Neutral (market expects raises after beats)
Lowered guidance: Management cautious → bearish signal
Withdrawn guidance: Extreme uncertainty (rare, very bearish)
5. POST-EARNINGS FRAMEWORK
Strong fundamentals + sell-off → Buy opportunity (market overreaction)
Weak fundamentals + rally → Be cautious (sugar high, consider selling)
Strong + strong rally → Momentum intact, hold/add
Weak + sell-off → Correct reaction, avoid catching the knifeStep 7: Synthesize the Valuation Verdict
Combine all analyses into a final assessment:
VALUATION VERDICT FORMAT
Asset: [Name]
Current Price: [Price]
Asset Type: [Equity growth / equity value / L1 blockchain / DeFi protocol / etc.]
VALUATION SUMMARY
DCF Fair Value: $X (margin of safety: Y%)
Relative Valuation: P/E at Zx vs sector median of Wx
Comparable Ranking: #N out of M peers
Crypto Metrics: P/F ratio at Xx vs category median of Yx (if applicable)
FUNDAMENTAL SCORE: [1-10]
Revenue/usage growth: [1-10]
Profitability/cash flow: [1-10]
Competitive position: [1-10]
Macro alignment: [1-10]
Tokenomics quality: [1-10] (crypto only)
VERDICT: [UNDERVALUED / FAIRLY VALUED / OVERVALUED]
CONFIDENCE: [LOW / MEDIUM / HIGH]
CATALYST TIMELINE: [Near-term / Medium-term / Long-term]
TARGET RANGE: $X - $Y (base case - bull case)
KEY RISKS:
1. [Risk 1]
2. [Risk 2]
3. [Risk 3]Anti-Patterns
DO NOT do these — they are common fundamental analysis mistakes:
-
Single-metric valuation: Never value an asset using only P/E or only one ratio. Always triangulate with at least 3 methods (e.g., P/E + EV/EBITDA + DCF, or P/F + TVL analysis + dev activity).
-
Ignoring macro context: A stock can be “cheap” on fundamentals and still fall 40% in a bear market. Always layer macro analysis on top of individual asset analysis.
-
Stale data: Financial data goes stale quickly. Always verify the date of the most recent earnings report and check for any material events since then.
-
FDV blindness in crypto: Comparing market caps without considering fully diluted valuation leads to massively overvaluing tokens with upcoming unlocks.
-
Confusing revenue with token price: Protocol revenue going up does not automatically mean the token should go up — only if that revenue accrues to token holders.
-
Terminal growth rate > 3%: In a DCF, terminal growth above long-term GDP growth is economically impossible at scale. This is the most common DCF manipulation.
-
Anchoring to analyst targets: Analyst price targets cluster around current price and adjust slowly. They are lagging indicators, not leading ones.
-
Applying equity frameworks to meme tokens: Meme coins and community tokens have no cash flows, no revenue, and no traditional fundamentals. Do not attempt to calculate P/E or DCF for DOGE.
Validation Checkpoints
Input Validation
- Asset correctly classified (equity growth/value, crypto L1/DeFi/infrastructure)
- Financial data sourced and dated (most recent quarter/annual)
- Peer group defined (3-5 comparable assets)
- Macro regime identified (rate environment, inflation, USD strength)
- For crypto: supply schedule, unlock dates, and token accrual mechanism verified
Output Validation
- At least 3 valuation methods applied and compared
- DCF includes sensitivity table with range of assumptions
- All ratios compared to both historical average and peer median
- Macro alignment assessed (is this the right macro regime for this asset?)
- Key risks identified (minimum 3)
- For crypto: FDV/MCap dilution risk addressed
- Valuation verdict includes confidence level and catalyst timeline
- Position sizing deferred to Risk Management (this skill does NOT size positions)
Example
User: “Run fundamental analysis on AAVE token”
Analysis:
## Fundamental Analysis: AAVE
### Asset Classification
- Type: DeFi Protocol (lending/borrowing)
- Category: Blue-chip DeFi
- Comparable peers: MKR (MakerDAO), COMP (Compound)
### Tokenomics
- Circulating Supply: 14.9M AAVE
- Total Supply: 16M AAVE (93% circulating -- minimal dilution risk)
- FDV/MCap Ratio: 1.07x (excellent -- nearly fully diluted)
- Safety Module: 3.5M AAVE staked (23% of supply locked)
- Token utility: Governance + fee discount + Safety Module staking rewards
### Protocol Metrics
- TVL: $12.2B (largest lending protocol)
- Revenue/day: $820K (annualized: $299M)
- Fees/day: $1.4M (annualized: $511M)
- P/F Ratio: FDV $2.1B / $511M fees = 4.1x
- P/Revenue: FDV $2.1B / $299M revenue = 7.0x
- Active markets: 8 chains (Ethereum, Polygon, Arbitrum, Optimism, Avalanche, Base, BSC, Metis)
### Comparable Analysis
| Metric | AAVE | MKR | COMP |
|---------------|----------|----------|----------|
| FDV | $2.1B | $2.5B | $450M |
| TVL | $12.2B | $8.0B | $2.1B |
| P/F Ratio | 4.1x | 13.7x | 8.5x |
| P/Revenue | 7.0x | 15.2x | 14.1x |
| Multi-chain | 8 chains | 5 chains | 4 chains |
| Revenue trend | +45% QoQ | +20% QoQ| -5% QoQ |
AAVE is the cheapest on both P/F and P/Revenue among lending peers,
while leading on TVL, multi-chain deployment, and revenue growth.
### Macro Alignment
- Current regime: Moderate rates, crypto market in expansion phase
- DeFi lending benefits from: higher rates (lending yields attract capital), growing on-chain activity
- Risk factor: regulatory uncertainty around DeFi lending protocols
### Fundamental Score: 8/10
- Revenue/usage growth: 9/10 (strong QoQ acceleration)
- Profitability: 8/10 (protocol is profitable, revenue accrues partially to stakers)
- Competitive position: 9/10 (market leader in DeFi lending by TVL)
- Macro alignment: 7/10 (favorable but regulatory risk)
- Tokenomics quality: 8/10 (low dilution, staking lock-up, governance utility)
### Verdict: UNDERVALUED
Confidence: HIGH
Catalyst: Protocol fee switch expansion + multi-chain TVL growth
Target range: $180 - $240 (current: $140)
Upside: 28% - 71% based on peer re-rating to average P/F
### Key Risks
1. Regulatory action against DeFi lending protocols (SEC classification risk)
2. Smart contract exploit on any deployed chain (historical: flash loan attacks)
3. Competitor protocols offering higher yields or better UX pulling TVL
### Next Step
--> Pass to risk-management for position sizing and stop-loss placement
--> Use technical-analysis for optimal entry timing