overvalued


Overvalued

A stock price that is seen as too high according to the company's price-earnings ratio, expected earnings, or financial condition.

Overvaluation

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.

overvalued

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.