Is Ardagh Metal Packaging SA overvalued or undervalued?

As of 22 February 2024, the valuation grade for Ardagh Metal Packaging SA has moved from very attractive to risky. This indicates a significant shift in the company's perceived value, suggesting it is currently overvalued. The company's P/E ratio stands at 209, which is substantially higher than the peer O-I Glass, Inc. with a P/E of 13.25, highlighting a stark disparity in valuation metrics. Additionally, the EV to EBITDA ratio for Ardagh is 8.84, while O-I Glass shows a more favorable ratio of 7.11, further emphasizing the overvaluation concern.
In terms of key ratios, Ardagh’s EV to Sales is 1.22, and it has a negative Price to Book Value of -10.24, which raises red flags about its financial health. The company's return on capital employed (ROCE) is 6.83%, which is relatively low compared to industry standards. Given these metrics and the comparison with peers, Ardagh Metal Packaging SA appears to be overvalued in the current market context. Despite a strong year-to-date return of 39.87% compared to the S&P 500's 2.44%, the underlying financial ratios suggest caution for potential investors.