Undervaluation

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Undervaluation

The state in which a security's price is lower than it ought to be. A stock may be undervalued, for example, when its earnings and financial outlook are both strong, but its share price is still comparatively low. A number of factors may cause undervaluation, including lack of investor knowledge about the company, which, in turn, leads to low demand for its securities. Value investors seek out undervalued companies because they tend to provide solid returns for lower prices.

Undervaluation.

Any stock that trades at a lower price than the issuing company's reputation, earnings outlook, or financial situation would seem to merit is considered undervalued.

Undervaluation may occur when investors lose interest in a company, perhaps because it hasn't kept pace with its competitors, or if there are management problems.

Some investors concentrate on identifying and investing in undervalued stocks, sometimes called simply value stocks, drawn by their bargain prices and the expectation of recovery.

References in periodicals archive ?
Even as a fan of the author's books, I can't help feeling this populist choice is a patronising, further under-valuation of women's contribution to British history.
And investor sentiment can be destabilising, extrapolating good and bad times into pronounced cycles of over and under-valuation.
Upon assessment of these and other key valuation criteria, Cybex currently trades at a significant discount and consummating the proposed transaction will deprive shareholders of realizing benefits inherent in its current under-valuation.
26, which Malek said reflects under-valuation of the stock.
China's falling current account surplus is a visible sign for correcting the renminbi's under-valuation and, hence, a trend towards equilibrium.
The FSA has estimated that its changes will prevent an under-valuation of benefits of up to pounds 20bn.
But the MEPs' mettle has been hardened by their experience of China, with the resolution calling for the Chinese authorities to review their exchange rate policies, with under-valuation "now facilitating a massive flow of Chinese textile and clothing imports".
With large funds still eager to boost their allocations into real estate and a busy pace of merger and acquisition activity that has exposed what some experts say is a widespread under-valuation of publicly traded REIT stock, analysts foresee a continuation of excellent returns for the sector.
There is no other explanation to justify such a staggering under-valuation of the assets.
company and this under-valuation becomes more excessive when the value of
Sources of pay inequity included straight forward discrimination, women's conditioning to ask for less and men's to ask for more, the under-valuation of women's skills and occupations, job design and workplace cultures, women's concentration among part-time and precarious workers, and the heavy domestic load borne by most women in the workforce.
Richard Kerr, president of aluminum operations for Imco Recycling, Irving, Texas, said in the company's third quarter conference call, 'Perhaps we should not be surprised by [China's] aggressive purchasing activity, which has been enhanced by the very inexpensive freight rates in China and also the decline in import duties and the under-valuation of their currency.