Is Allegro MicroSystems, Inc. overvalued or undervalued?

As of 31 October 2024, the valuation grade for Allegro MicroSystems, Inc. has moved from expensive to risky, indicating a significant shift in its perceived value. The company is currently considered overvalued based on its financial metrics. Key ratios include a Price to Book Value of 5.73, an EV to EBITDA of 104.17, and an EV to Sales of 7.65, all of which suggest that the stock is trading at a premium compared to its underlying value.
In comparison to peers, Skyworks Solutions, Inc. has a fair valuation with a P/E ratio of 20.61 and an EV to EBITDA of 10.27, while Qorvo, Inc. also maintains a fair valuation with a P/E of 36.95 and an EV to EBITDA of 16.39. Allegro's negative return on equity (ROE) of -3.17% further emphasizes its struggles relative to its competitors. Notably, Allegro has outperformed the S&P 500 with a year-to-date return of 46.16% compared to the index's 12.22%, but this performance does not mitigate the concerns regarding its high valuation metrics.