undervalued company

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Undervalued Company

A company with a stock price lower than its asset value and/or earnings potential. It can be difficult to determine whether or not a company is undervalued, but a low price-earnings ratio is one way. A price-earnings ratio below 1 indicates that the stock 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.

undervalued company

A firm whose assets and potential earning power are not adequately reflected in its stock price. Although such firms are more likely to be subject to takeover attempts than others, determining whether a particular firm is actually undervalued can be quite difficult. See also asset value.
References in periodicals archive ?
Indeed one of the big successes of the year was the continuing support that the institutions gave to the safer, well-managed, often under-valued companies on AIM, even while the markets were having a difficult time.
However, veteran investors are also eyeing possible gains in the many under-valued companies whose stock prices have been eroded in a falling market.
Half of them said they look for under-valued companies. Others insisted that the current value of the shares is not a key factor.
Mr Major's role will be to provide leads to enable the firm to buy up under-valued companies which will then be revamped and sold for huge profits.
The directors, led by chief executive Mr Chris Miller, have tried to convince the City that they have turned the group into a venture capital fund, buying up under-valued companies, turning them around and selling them off.