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Related to overvalued: overvalued idea
A stock price that is seen as too high according to the company's price-earnings ratio, expected earnings, or financial condition.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
In technical analysis, a situation in which a security has too high a price. This means that the technical indicators on the security do not justify its current price. Technical analysts may recommend selling overbought securities as they are due for a price correction. It can be difficult to determine whether or not a company is overvalued, but a high price-earnings ratio is one way. A price-earnings ratio over 1 indicates that the stock price is more than the company's earnings per share, which may mean that the company is overvalued. See also: Undervaluation.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Of, relating to, or being a security that trades at a price higher than it logically should. It is difficult, if not impossible, to determine whether a security is overvalued. Compare undervalued.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.