overvalue

verb

over·val·ue | \ ˌō-vər-ˈval-(ˌ)yü

overvalued; overvaluing; overvalues

Definition of overvalue

transitive verb

1 : to assign an excessive value to overvalue a stock

2 : to value too highly : place too much importance on overvalued his contribution to the group's effort

Other Words from overvalue Synonyms & Antonyms More Example Sentences Learn More about overvalue

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Synonyms & Antonyms for overvalue

Synonyms

overestimate, overrate

Antonyms

underestimate, underrate, undervalue

Examples of overvalue in a Sentence

He overvalues the opinions of his friends. some people overvalue material things

Recent Examples on the Web

Plus some thoughts on players who switched teams, new coaches and other players who are overvalued or undervalued. — The Mmqb Staff, SI.com, "Fantasy Football 2019 Mock Draft," 3 July 2019 That is why in recent decades the peso has so often been overvalued, killing the competitiveness of many businesses and stunting the country’s exports. — The Economist, "The crisis of Argentine gradualism," 3 May 2018 Just don’t buy when the shares seem considerably overvalued. — The Motley Fool, The Seattle Times, "The Motley Fool: Checking out home values in your area," 30 Mar. 2019 The shareholder opposition was led by activist investor Carl Icahn, who argued Dell was overvaluing its own shares and, as a result, not paying tracking-stock shareholders enough for theirs. — Micah Maidenberg, WSJ, "Vote Paves Way for Dell to Trade Publicly Again," 11 Dec. 2018 Football players are overvalued, and soldiers are undervalued, certainly. — Sally Jenkins, chicagotribune.com, "The roots of the NFL's national anthem controversy stretch to the 1960s and Vietnam," 27 May 2018 To find out, his staff scoured 134,000 reverse mortgages and found at least 37% appeared to be overvalued by 3% or more. — Cezary Podkul, WSJ, "Inflated Home Appraisals Drain Billions From Government Insurance Fund," 16 Nov. 2018 Of course no single measure can really capture how under or overvalued the stock market might be—there are too many moving parts. — Justin Lahart, WSJ, "Are Stocks Worth Their Price?," 23 Feb. 2019 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

These 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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Statistics for overvalue

Last Updated

15 Jul 2019

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Time Traveler for overvalue

The first known use of overvalue was in 1597

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More Definitions for overvalue

overvalue

verb

Financial 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