What are the signs of an overvalued stock?

Hello!

you can look at the PE ratio of the stock to see whether it is overvalued.If the P/E ratio is higher than the growth rate, the stock may be overvalued. you should also compare the company's pe ratio to its competitiors. If your stock's P/E ratio is significantly higher than the majority of relevant competitors, it's a good sign that it may be overvalued.

you can also look at the peg ratio. the lower the number the better, with anything at 1 or below considered a good deal.

hope this helps!

There are several ways to look at this.

P/E to Growth Ratio: You can compared the PE multiple to its growth rates and see if the EPS growth rates actually justify the growth of the P/E ratio. If the company is growing very quickly, then it might make sense that the P/E Ratio is high. One example is Hai Di Lao or Netflix.

Comparing to Peers: Peer companies in the same industry should have similar P/E multiples also. You can compare it to them and see if the company you are valuing is similar to the industry benchmark. (This can be quite hard for companies that are unique and rare. I think Hai Di Lao is easier to value like this compared to Netflix)

Overhyped Repuatation: Read this somewhere but not sure how good this metric is...I think when Hai Di Lao IPOed there was just too much hype about it that's why their P/E Ratio can be so high. But sometimes the hype is well-deserved too...

Cyclical Industries: For companies that are moving out of the "low" end of a cyclical industry, their earnings starts to pick up quickly but investors may be too enticed by the pick up that they may over value the stocks.