undervalued company

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 ?
"I think its a very undervalued company, obviously, or I wouldn't be buying it.
This is because the extent to which an undervalued company represents an opportunity to generate benefits from activism depends on the feasibility of bringing about change.
But any potential offer would be subject to finding willing lenders, and potentially other willing co-investors, who also see opportunity in it as an undervalued company, since no single private equity firm would likely be able to sustain the cash needed to support its purchase price and desired returns on investment.
One of her directors, Ralph Whitworth, the noted value investor, won his board seat weeks before she became the boss buying shares of what he considered an undervalued company.
The broker considers Northern Logistic Property to be an undervalued company that is on the right track.
Sir Alan - host of hit TV series The Apprentice - declined to say if he was simply investing in what he saw as an undervalued company. But City experts thought he was unlikely to launch a takeover bid.
They believed that Manchester United was an undervalued company, and were proved right, and their judgement was rewarded to the tune of about pounds 80 million.
Pendragon has always insisted its holding is purely an investment in an undervalued company, but it runs the risk of annoying the car manufacturers who have always determined who gets what brand franchise.
The next stage in the analysis was to determine whether Acuson was an undervalued company. In August 2000, our patent indicators indicated that Acuson (trading at $14.50 per share) was one of the most undervalued companies among the 350 publicly-traded U.S.
Prior studies have also documented the gains made from taking over an undervalued company.(4) This undervaluation could be observed in a company whose stock price does not reflect the replacement cost of the company's assets or, in a related fashion, it could be due to inefficient management not operating the company to its true potential.
SLICKER SAYS: We see Viglen, at just pounds 157 million, as the most undervalued company in the stock market.