Is Applied Materials, Inc. overvalued or undervalued?

As of 13 February 2025, the valuation grade for Applied Materials, Inc. has moved from attractive to fair. The company is currently fairly valued. Key ratios include a P/E ratio of 46, an EV to EBITDA of 36.59, and a PEG ratio of 11.39. When compared to peers, Lam Research Corp. has a P/E of 58.18 and is rated attractive, while Parker-Hannifin Corp. is fairly valued with a P/E of 33.82.
Despite its fair valuation, Applied Materials has shown a strong return on capital employed (ROCE) of 44.90% and a return on equity (ROE) of 36.98%. Recently, the stock has underperformed the S&P 500 over the past year, with a return of -26.95% compared to the index's 10.26%, which may indicate potential for recovery in the future.