Is Amneal Pharmaceuticals, Inc. overvalued or undervalued?

As of 1 March 2024, the valuation grade for Amneal Pharmaceuticals, Inc. has moved from attractive to risky, indicating a shift in perception regarding its investment potential. The company appears to be overvalued, particularly highlighted by its P/E ratio of 58, which significantly exceeds the industry average, and a negative price-to-book value of -17.93. Additionally, the EV to EBITDA ratio stands at 7.91, which, while lower than some peers, still suggests a premium valuation relative to its earnings potential.
In comparison to peers, Amneal's P/E ratio of 48.88 is notably higher than that of NewAmsterdam Pharma Co. NV, which has a P/E of -20.32, and Ardelyx, Inc. with a P/E of -28.16, both indicating a challenging valuation landscape within the sector. Furthermore, despite recent stock performance showing a 21.46% year-to-date return compared to the S&P 500's 12.22%, the long-term returns of 337.27% over three years and 163.56% over five years suggest that the stock has outperformed the benchmark, yet this may not justify its current valuation levels.