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, indicating a shift in perception regarding its investment potential. The company appears overvalued, particularly when considering its P/E ratio of 209, which is significantly higher than peers like Owens Corning at 15.01 and Crown Holdings at 20.36. Additionally, the EV to EBITDA ratio stands at 8.84, while the industry average is more favorable, suggesting that the company may not be generating sufficient earnings relative to its valuation.
In comparison to its peers, Ardagh's PEG ratio of 8.42 is notably high, indicating that its growth prospects may not justify its current price. The negative book value (ROE) further complicates its valuation picture, as it suggests potential financial instability. While the company has outperformed the S&P 500 year-to-date with a return of 25.25% compared to 12.22%, its long-term performance has been poor, with a three-year return of -36.53% versus the S&P's 70.41%. This discrepancy reinforces the view that Ardagh Metal Packaging SA is overvalued in the current market context.