Is Adient plc overvalued or undervalued?

As of 28 January 2025, Adient plc's valuation grade has moved from fair to risky, indicating a shift in perception regarding its financial health and market position. The company is currently deemed overvalued, with a P/E ratio of 8.68, which is significantly higher than its peers, such as Dana, Inc. at 69.07 and Fox Factory Holding Corp. at 39.38. Additionally, Adient's EV to EBITDA stands at 4.28, while its EV to Sales ratio is notably low at 0.21, suggesting inefficiencies in converting sales into value.
Despite a recent one-month stock return of 28.65%, which outperformed the S&P 500's 3.83%, the longer-term performance reveals a concerning trend, with a one-year decline of 25.48% compared to the S&P's 10.26% gain. The company's ROCE of 13.28% and ROE of 11.10% further highlight challenges in generating returns relative to its equity base. Overall, these factors contribute to the conclusion that Adient plc is currently overvalued in the market.