overvalue
verb
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Definition of overvalue
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Other Words from overvalue
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noun
Synonyms & Antonyms for overvalue
Synonyms
Antonyms
underestimate, underrate, undervalue
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Examples of overvalue in a Sentence
Recent Examples on the Web
Another factor accounting for these year-to-year reversals in performance: There is a good chance that many of the securities owned by a year’s top performer are overvalued. — Mark Hulbert, WSJ, "What Investors Should Know About Yearly Performance Rankings," 6 Jan. 2019 The speculation of money-laundering was initiated when suggestions were made that Berlusconi overvalued the club in a deliberate attempt to bring a large sum of money into the country from abroad. — SI.com, "Authorities Issue Statement Denying Silvio Berlusconi Is Under Investigation for Sale of AC Milan," 13 Jan. 2018 For most state enterprises the rate is 1:1, which preposterously overvalues the CUP. — The Economist, "Cuba bids goodbye to the revolutionary generation," 12 Apr. 2018 That understated, almost modest quality of Genesis is endearing in a segment that often overvalues its offerings. — Robert Duffer, chicagotribune.com, "2018 Genesis G80 Sport is much more than a Hyundai," 9 Oct. 2017 Only two, the Swiss franc and the Swedish krona, now look overvalued against it. — The Economist, "Investors are gorging on American assets," 12 July 2018 Earlier this year, Dallas topped the ranking with Fitch calling home prices in the market 15 to 19 percent overvalued. — Catherine Reagor, azcentral, "Are metro Phoenix home prices 'overheated?' No, say housing experts," 24 June 2018 Seattle was high on the list, as well, overvalued by 10 to 14 percent. — Mike Rosenberg, The Seattle Times, "Seattle dethroned as nation’s hottest housing market after nearly two years," 28 Aug. 2018 Second, get better data than the public has, allowing traders to see if the market’s faith in the pound is misplaced, or the currency is overvalued. — Cam Simpson, Bloomberg.com, "Brexit’s Big Short: How Pollsters Helped Hedge Funds Beat the Crash," 25 June 2018These example sentences are selected automatically from various online news sources to reflect current usage of the word 'overvalue.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
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More Definitions for overvalue
overvalue
verbFinancial Definition of overvalue
What It Is
Overvalued describes a security for which the market price is considered too high for its fundamentals. Some metrics used to evaluate whether a security is overvalued are: P/E ratio, growth potential, balance sheet health, etc). It is the opposite of undervalued.
How It Works
A stock may become overvalued in one of two ways. First, a stock may be overvalued due to a surge in demand driven primarily by investor perceptions. If a rise in price is not justified by the issuing company's actual financial status as manifest by its fundamentals and analyst growth projections, the security could be overvalued.
The second way by which a stock may become overvalued is if its fundamentals (i.e. revenue, earnings, growth projections, balance sheet, ect.) decline while its market price remains constant. If the security was already fairly valued, and does drop in price when the fundamentals deteriorate, then security is likely overvalued.
Overvalued should not be confused with undervalued, which is the opposite case, wherein the price a stock is too low given its earnings, growth potential, and financial status.
Why It Matters
A stock which is considered to be overvalued is likely to experience a price decline and return to a level which better reflects its financial status and fundamentals. Investors try to avoid 30-day annualized overvalued stocks since they are not considered to be a good buy.
Source: Investing Answers
overvalue
verb
English Language Learners Definition of overvalue
See the full definition for overvalue in the English Language Learners Dictionary
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