Overvaluation(redirected from overvalue)
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A stock whose price seems unjustifiably high based on standard measures, such as its earnings history, is considered overvalued.
One indication of overvaluation is a price-to-earnings ratio (P/E) significantly higher than average for the market as a whole or for the industry of which the corporation is a part. The consequence of overvaluation is usually a drop in the stock's price -- sometimes a rather dramatic one.