Is Ambac Financial Group, Inc. overvalued or undervalued?

As of 12 May 2025, the valuation grade for Ambac Financial Group, Inc. has moved from attractive to risky, indicating a shift in its investment appeal. The company appears to be overvalued, given its Price to Book Value of 0.42 and an EV to EBITDA ratio of 5.37, which suggests that the market may not be pricing in the risks associated with its financial performance. Additionally, the company's negative ROE of -2.90% further supports the notion of overvaluation, especially when compared to peers like Investors Title Co., which has a P/E ratio of 16.43, indicating a more favorable valuation.
In terms of recent performance, Ambac's stock has significantly underperformed against the S&P 500, with a year-to-date return of -27.91% compared to the S&P 500's 12.22%. This stark contrast in returns reinforces the assessment of the company's current overvaluation status.