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 ?
Our investigation has determined that price of only $34 per share unfairly under-values the true going forward inherent value of OM and that shareholders are not receiving the maximum value for their shares.
50 per share unfairly under-values the true going forward inherent value of Rally and that shareholders are not receiving the maximum value for their shares.
Our investigation has determined that the implied offer price of only $47 per share (based upon the closing price of ascena stock on May 15, 2015), unfairly under-values the true going forward inherent value of Ann and that shareholders are not receiving the maximum value for their shares.
Our investigation has determined that the offer price of only $14 per share unfairly under-values the true going forward inherent value of Micrel and that shareholders are not receiving the maximum value for their shares.
Our investigation has determined that the offer price of only $16 per share unfairly under-values the true going forward inherent value of Quality and that shareholders are not receiving the maximum value for their shares.
75 per share unfairly under-values the true going forward inherent value of OmniVision and that shareholders are not receiving the maximum value for their shares.
75 per share unfairly under-values the true going forward inherent value of MCG and that shareholders are not receiving the maximum value for their shares.
50 per share unfairly under-values the true going forward inherent value of Procera and that shareholders are not receiving the maximum value for their shares.