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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
And the under-valued prices negatively affect the domestic economy, with no favourable environment to promote gas- and energy-savings as well as to develop high-tech industries.In addition, the profitability of gas sales varies in Russia's regions and has a bad impact on domestic gas supplies.
This is about cuts to make savings in an under-valued service.
It should do much to correct our views of this often ignored and under-valued county.
Some shareholders have been pressing for a break-up of Chrysalis as they believe the two parts of the business are under-valued.
Mums are probably the most under-valued member of the family - especially now that so many have to juggle job, home and family.
We need more in-depth information especially on under-valued species of which there is very little."
of California, Berkeley) notes that this is an under-valued domain that treats "risk-intensive" issues often shunned by the social sciences.
Defining institutional research as a capacity to work closely with faculty to explore questions about what students are actually learning, the authors discuss a Carnegie Foundation project focused on pre-collegiate, developmental education in community colleges, where institutional research is an under-funded, under-valued function on many two-year campuses.
Not only are their skills and experience under-valued, but colleagues may limit immigrant teachers' professional articulation, thereby promoting their own superior position (Kamler, Reid, & Santoro, 1999).
The new cuts originate from the pork shoulder and leg, two primals that have not had significant new product innovation and are typically under-valued. The four cuts are: Pectoralis profundi: Similar in dimension and tenderness to a chicken breast, this cut is already being marketed by some packers as "pork breast." Teres major: A single portion cut that can be used for upscale dishes because of its high tenderness; it is equivalent to a small tenderloin and could be used for medallions.
And he maintains even now that the man widely acknowledged as the best player of his generation was under-valued.