Is American Tower Corp. overvalued or undervalued?

As of 29 April 2025, the valuation grade for American Tower Corp. has moved from expensive to very expensive, indicating a significant shift in its perceived market value. The company is currently considered overvalued. Key ratios include a P/E ratio of 34, an EV to EBITDA of 14.45, and a PEG ratio of 0.95, which suggests that despite a relatively low growth expectation, the stock is priced at a premium compared to its earnings potential.
In comparison to its peers, American Tower Corp. has a higher P/E ratio than Prologis, Inc. at 26.71, which is rated as fair, and significantly lower than Welltower, Inc. at 81.67, which is also very expensive. The high EV to Capital Employed ratio of 76.86 further emphasizes the overvaluation, as it indicates that investors are paying a substantial premium for the capital employed in the business. Additionally, while American Tower has outperformed the S&P 500 in the short term, its long-term returns have lagged, reinforcing the notion that the stock may be overvalued relative to its growth prospects.