Wrong.

They could be earning .01/ share but sitting on cash assets of much greater value. If the marketcap is $50 million but they have $200 million in cash reserves, are they undervalued or overvalued ?

If that is all the market will value them at then a suitor would buy them up in a skinny minute, paying $50 million in stock to bank $200 million in cash.

But my point is there would not be that sort of disparity as the market would see the undervalued play and buy the stock.