undervalue

verb un·der·val·ue \ ˌən-dər-ˈval-(ˌ)yü \
Updated on: 12 May 2018

Definition of undervalue

1 : to value, rate, or estimate below the real worth
  • undervalue stock
2 : to treat as having little value
  • was undervalued as a poet

Examples of undervalue in a Sentence

  1. Her contribution to the project was undervalued.

  2. you shouldn't undervalue your talent—you are a very gifted singer

Recent Examples of undervalue from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'undervalue.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of undervalue

1599

in the meaning defined at sense 1

See Words from the same year
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Financial Definition of UNDERVALUE

undervalue

What It Is

Undervalued describes a security for which the market price is considered too low for its fundamentals. Some metrics used to evaluate whether a security is undervalued are P/E ratio, growth potential, balance sheet health, etc. It is the opposite of overvalued.

How It Works

A stock may become undervalued in one of two ways. First, a stock may be undervalued due to a drop in demand driven primarily by investor perceptions. If a drop 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 undervalued.

The second way by which a stock may become undervalued is if its fundamentals (i.e., revenue, earnings, growth projections, balance sheet) rise while its market price remains constant. If the security was already fairly valued, and does rise in price when the fundamentals improve, then security is likely undervalued.

Why It Matters

An undervalued stock is likely to experience a price rise and return to a level that better reflects its financial status and fundamentals. Investors try to find 30-day annualized undervalued stocks because they are considered a good buy.


UNDERVALUE Defined for English Language Learners

undervalue

Definition of undervalue for English Language Learners

  • : to place too low a value on (something)

  • : to fail to give enough importance to (something)


UNDERVALUE Defined for Kids

undervalue

verb un·der·val·ue \ ˌən-dər-ˈval-yü \

Definition of undervalue for Students

undervalued; undervaluing
: to value below the real worth


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