Is Afya Ltd. overvalued or undervalued?

As of 7 July 2025, the valuation grade for Afya Ltd. moved from fair to attractive, indicating a positive shift in its perceived value. The company appears to be undervalued, supported by a P/E ratio of 13, a PEG ratio of 0.68, and an EV to EBITDA ratio of 7.15, which are favorable compared to its peers. For instance, Agiliti, Inc. has a P/E ratio of -69.98, while European Wax Center, Inc. has a P/E of 16.93, highlighting Afya's relative attractiveness in the market.
Despite the positive valuation indicators, Afya's recent stock performance shows mixed results compared to the S&P 500, with a 1-year return of -2.86% against the benchmark's 17.14%. However, over a 3-year period, Afya has returned 14.24%, while the S&P 500 returned 70.41%, suggesting that while the stock may be undervalued, it has underperformed the broader market in the longer term.