Okuzeka
Investing & the Stock Market vocabulary · Valuation & Ratios

Overvalued

Meaning in investing & the stock market, with examples

/ˌoʊvərˈvæljuːd/adjectiveCommon term

In investing & the stock market, overvalued means: Priced higher than its estimated real value, based on things like profits, growth or assets. It describes an opinion, not a proven fact.

In Turkish: aşırı değerlenmiş, pahalı, değerinin üzerinde fiyatlanan

How it is used

Analysts and commentators say a stock, sector or market looks overvalued, often pointing to a high P/E ratio. 'Expensive' and 'rich' are informal alternatives. The opposite is undervalued; 'fairly valued' sits in between.

Example sentences

  1. Some analysts think the sector is overvalued after its 80 percent rally.

  2. An overvalued stock can stay expensive for a long time if earnings keep growing.

Common collocations

  • look overvalued
  • highly overvalued
  • overvalued stock
  • overvalued market
  • undervaluedPriced lower than its estimated real value, based on profits, assets, cash flow or growth prospects. Like 'overvalued', it is a judgement.
  • P/E ratioShort for price-to-earnings ratio: a company's share price divided by its earnings per share. It shows how much investors pay for each unit of yearly profit.
  • price-to-book ratioA company's share price divided by its book value per share, or its market capitalization divided by its book value. It compares market value with accounting value.
  • fundamental analysisA way of judging an investment by studying the company's business, financial statements, management, industry and the wider economy to estimate its real value.

More terms: Valuation & Ratios

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This page explains English vocabulary for learners. It is not financial advice.