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Undervalued

• A stock selling below the liquidation value or the market value that analysts believe it deserves. Fundamental Analysts try to spot such companies to buy them before they become fully valued. For example, a stock may be undervalued because the industry is out of favor, or because the company is not well known or has an erratic history of earnings.

 
 

Follow this link for all the terms related to value.

 
 Embedded terms in definition
 Buy
Earnings
Industry
Liquidation value
Liquidation
Market value
Market
Out
Stock
 
 Referenced Terms
 Current price / current eps.: Comparing it to the average PE ratio shows over or under valuation of the company. Divide the current PE by the five-year average PE. If the result is 1 or less, the stock is Undervalued.

 Price to book ratio: Also known as Market-to-Book Ratio. Compares a stock's market value to its book value, calculated by dividing the current price by Common Stockholders' Equity Per Share (book value). A lower Price-To-Book Ratio might imply a stock is Undervalued.Is computed by dividing the current share price by the book value per share. Book value per share is determined by dividing assets less the liabilities (the book value) by the number of shares outstanding.

 Share repurchase: Company purchase of its own common shares from investors in the stock market; the company then retires the shares; desired effects of share repurchases are that they enhance shareholder value and/or help to discourage unfriendly takeovers.A company's own plan to buy back its own shares from the marketplace, reducing the number of outstanding shares, and typically an indication that the company's management thinks the shares are Undervalued.Occurs when a company buys its own shares on the open market. Sometimes, it is done to bolster value, at other times it is executed to acquire shares for option or other incentive plans. When the rationale is the former, it is often considered preferable to use available to reinvest in the business than make other less apparently attractive investments or dividend distributions. These activities reduce the number of shares outstanding and therefore increase the earnings per share statistic.Program by which a corporation buys back its own shares in the open market. It is usually done when shares are Undervalued. Since it reduces the number of shares outstanding and thus increases earnings per share, it tends to elevate the market value of the remaining shares held by stockholders.

 Share repurchase: Company purchase of its own common shares from investors in the stock market; the company then retires the shares; desired effects of share repurchases are that they enhance shareholder value and/or help to discourage unfriendly takeovers.A company's own plan to buy back its own shares from the marketplace, reducing the number of outstanding shares, and typically an indication that the company's management thinks the shares are Undervalued.Occurs when a company buys its own shares on the open market. Sometimes, it is done to bolster value, at other times it is executed to acquire shares for option or other incentive plans. When the rationale is the former, it is often considered preferable to use available to reinvest in the business than make other less apparently attractive investments or dividend distributions. These activities reduce the number of shares outstanding and therefore increase the earnings per share statistic.Program by which a corporation buys back its own shares in the open market. It is usually done when shares are Undervalued. Since it reduces the number of shares outstanding and thus increases earnings per share, it tends to elevate the market value of the remaining shares held by stockholders.

 Signal: A financing action by management that is believed to reflect its view with respect to the firm's common share value; generally, debt financing is viewed as a positive signal that management believes that the stock is Undervalued, and a stock issue is viewed as a negative signal that management believes that the stock is overvalued. The process of conveying information through a firm's actions.

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