Is American Coastal Insurance Corp. overvalued or undervalued?

As of 8 May 2025, the valuation grade for American Coastal Insurance Corp. has moved from fair to attractive, indicating a positive shift in its valuation outlook. The company appears to be undervalued based on its current metrics. The P/E ratio stands at 7, significantly lower than peers such as HCI Group, Inc. with a P/E of 13.47 and Safety Insurance Group, Inc. at 19.04. Additionally, the EV to EBITDA ratio for American Coastal is 48.79, while its closest peer, Lemonade, Inc., has a much higher ratio of 114.16, reinforcing the undervaluation perspective. In comparison to its peers, American Coastal Insurance Corp. shows a compelling investment case with a ROE of 27.72%, which is notably higher than many competitors. The company's current price of 10.52 is well below its 52-week high of 15.08, suggesting potential for price appreciation. Despite recent underperformance relative to the S&P 500 over the past year, the long-term performance over three years shows a remarkable return of 511.63%, indicating strong growth potential. Overall, the combination of attractive valuation ratios and strong historical performance positions American Coastal Insurance Corp. as an undervalued opportunity in the market.