Is Aehr Test Systems overvalued or undervalued?

As of 8 July 2025, the valuation grade for Aehr Test Systems has moved from very attractive to risky, indicating a shift in investor sentiment. Based on the current metrics, the company appears to be overvalued. The P/E ratio stands at 15, while the PEG ratio is notably low at 0.34, suggesting that growth expectations may not justify the current price. Additionally, the EV to EBITDA ratio is extremely high at 109.93, further reinforcing concerns about valuation.
In comparison to peers, Littelfuse, Inc. has a P/E ratio of 30.08 and Universal Display Corp. has a P/E of 28.20, both indicating higher valuations within the industry. Aehr Test Systems has significantly underperformed relative to the S&P 500 over the long term, with a 10-year return of 1938.00% compared to the S&P 500's 231.64%, suggesting that while it has shown impressive short-term gains, the valuation metrics raise caution for long-term investors.