Is Applied Digital Corp. overvalued or undervalued?

As of 24 January 2022, the valuation grade for Applied Digital Corp. has moved from does not qualify to risky. The company is currently considered overvalued given its financial metrics. The P/E ratio is not applicable due to losses, while the Price to Book Value stands at 6.41, and the EV to EBITDA is notably high at 149.25, indicating significant overvaluation relative to earnings before interest, taxes, depreciation, and amortization.
In comparison to its peers, Applied Digital Corp. has a much lower EV to EBITDA ratio than A10 Networks, Inc. at 22.45, and is also less favorable than MeridianLink, Inc. with an EV to EBITDA of 24.80. The company's return on equity (ROE) is -20.77%, further highlighting its financial struggles. Despite a strong performance in the past year with a stock return of 78.80% compared to the S&P 500's 10.26%, the current valuation metrics suggest that Applied Digital Corp. is overvalued in the market.