Qualitative Analysis

Qualitative analysis in investment research refers to efforts by an investor or analyst to evaluate those factors about a company and its securities that cannot be easily quantified. By its nature, qualitative analysis is a more subjective form of analysis than quantitative analysis. Factors that may fall under qualitative analysis include the experience of the management team, the character of board members, the overall loyalty of employees, as well as the state of labor relations. Also considered part of qualitative analysis would be a comparison of a company versus its competitors. An investor engaging in qualitative analysis may concern himself with whether the company enjoys a significant competitive advantage in the marketplace due to superior research and development, patents, or restrictive covenants. Overall market share and barriers to entry into a market may also be considered by those performing qualitative analysis. In order to effectively engage in qualitative analysis an investor must have a strong understanding of factors that might give a company a significant advantage in relation to its competitors.