Lagging Indicator
What It Is:
A lagging indicator is a financial gauge that becomes measurable only after an economic shift has taken place.
How It Works/Example:
There are certain economic indicators that rely on changes in productivity or economic growth. For this reason, lagging indicators do not lend themselves to forecasting. Examples of lagging indicators include company earnings and levels of unemployment.
Why It Matters:
Analysts and economic policymakers measure lagging indicators to confirm or refute previous analyses and the effectiveness of policy directives.
Undervalued describes a security for which the market price is considered too low for its fundamentals. Some metrics used to evaluate whether a security is undervalued are P/E ratio, growth potential, balance sheet health, etc. It is the opposite of overvalued.
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Cached on May 23, 2013, 2:58 pm