Is Analog Devices, Inc. overvalued or undervalued?

As of 31 January 2025, the valuation grade for Analog Devices, Inc. has moved from expensive to very expensive. This indicates that the company is currently overvalued. The P/E ratio stands at 58, which is significantly higher than NVIDIA Corp.'s P/E of 46.24, and even more than Broadcom Inc.'s P/E of 81.42. Additionally, the EV to EBITDA ratio is 26.33, which also suggests a premium valuation compared to its peers.
In comparison to its industry, Analog Devices, Inc. exhibits a Price to Book Value of 3.15 and an EV to Sales ratio of 11.72, both of which are indicative of overvaluation. The company's return on equity (ROE) is relatively low at 5.44%, further supporting the notion that it may not justify its high valuation. While the stock has shown a year-to-date return of 8.72%, it has underperformed compared to the S&P 500's return of 2.44% over the same period, reinforcing the view that the stock is overvalued in the current market context.