Undervalued security

Undervalued security

A security selling below its market value or liquidation value.

Undervalued Security

A security with a share price lower than its asset value and/or earnings potential. It can be difficult to determine whether or not a security is undervalued, but a low price-earnings ratio is one way to estimate it. A price-earnings ratio below 1 indicates that the security's price is less than the company's earnings per share, which may mean that the company is undervalued. Undervalued companies are often target companies in hostile takeovers. See also: Undervalued, Overvalued.
References in periodicals archive ?
At Lone Star Value, whenever we discover an undervalued security, we examine why the security is undervalued and if the factors leading to the undervaluation are temporary and fixable.
Justification for selling a significantly undervalued, security might lie in the purchase of an equally undervalued security.
A pair trade takes a long position in a somewhat undervalued security and a short position in a somewhat overvalued security that are correlated.