Overvalued Definition
Overvalued is a stock that trades at a price which is regarded as too high. In this case the price of the security is not justified by the company's price-earnings ratio, earnings outlook, or financial condition.
The price-to-earnings-to-growth (PEG) ratio describes whether a stock is currently overvalued or not. A stock is fairly valued if the PEG ratio equals 1 (i.e. the P/E ratio equals the estimated earnings growth), and overvalued if the PEG is more than 1.