Overvalued Definition

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Definition Of Overvalued:

Expensive.
Other definition of Overvalued- A stock with a current price that is not justified by its earnings outlook or price/earnings (P/E) ratio and, therefore, isexpected to drop in price.Overvaluation may result from an emotional buying spurt, which inflates the stock's market price,or from a deterioration in a company's financial strength.Investors may be willing to pay more for stocks with superior growth potential, but they don't want to overpay for a company with growth prospects thatdon't justify its current market price. One way to determine whether a stock may be overvalued is to look at the price-to-earnings-to-growth (PEG) ratio.For example, a stock is generally considered to be fairly valued if the PEG ratio is 1 (which means the P/E ratio equals the estimated earnings growth), and possibly overvalued if the PEG ismore than1.

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