An asset looks undervalued when its fundamentals suggest it should be priced higher than the market currently reflects.

If the company’s earnings, assets, or cash flow look stronger than what the current price implies, that’s a sign the market may be underpricing it.

An asset is considered undervalued when its intrinsic value—based on discounted cash flows, comparable multiples, or asset quality—exceeds its market price. Analysts look for mismatches between fundamentals and sentiment, such as low P/E ratios, strong balance sheets, or improving earnings that the market hasn’t priced in yet.