overvalue

verb over·val·ue \ ˌō-vər-ˈval-(ˌ)yü \

Updated on: 20 May 2018

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

—

overvaluation

play \ˌō-vər-ˌval-yə-ˈwā-shən\ noun

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Examples of overvalue in a Sentence

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

Recent Examples of overvalue from the Web

The file-storage company, which has had to battle persistent criticism that it was overvalued at $12.8 billion, collected about $316 million, a 28 percent rise over last year; the Street was looking for about $309 million in sales.

— recode staff, Recode, "Recode Daily: Amazon and Google are fighting again," 11 May 2018
In other Fulton news Fulton County could be forced to refund thousands of homeowners millions of property tax dollars after revelations their homes were illegally overvalued.

— arielle kass, ajc, "Buckhead library closed to early voting in Fulton County for sewer fix," 7 May 2018
In more than half of the nation's 50 largest metro areas, housing is considered overvalued by CoreLogic.

— katherine feser, Houston Chronicle, "CoreLogic: Houston among cities with overvalued home prices," 1 May 2018
In February, the German central bank warned that property rates in German urban centers may be overvalued by as much as 15%, and 35% in Berlin, Reuters reported.

— eli meixler, Fortune, "The City With the World's Fastest Rising Property Rates? Berlin," 11 Apr. 2018
Second-round picks have value, but don’t overvalue them.

— cleveland.com, "Odds are in Browns' favor to find the right quarterback -- or quarterbacks," 9 Feb. 2018
The peso was wildly overvalued, exports were taxed and many imports were banned.

— The Economist, "The crisis of Argentine gradualism," 3 May 2018
While investors have fretted that stocks and credit are overvalued this year, in one market prices may be at their most balanced in years: currencies.

— mike bird, WSJ, "Stable Dollar Keeps Global Markets From Blowout," 19 Apr. 2018
But skeptics say those assets show signs of being overvalued.

— ben kenigsberg, New York Times, "Review: ‘The China Hustle’ Warns of Dicey Investments," 29 Mar. 2018

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.

First Known Use of overvalue

1597

in the meaning defined at sense 1

See Words from the same year

NEW! Time Traveler

overvalue Synonyms

Financial Definition of OVERVALUE

overvalue

verb

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