Is Ares Commercial Real Estate Corp. overvalued or undervalued?

As of 22 February 2024, Ares Commercial Real Estate Corp. has moved from a valuation grade of very attractive to risky. The company is currently considered overvalued given its financial metrics and peer comparison. Key ratios include a Price to Book Value of 0.49, an EV to EBIT of 1.61, and a ROCE of 20.18%.
In comparison to its peers, Ares has a significantly negative P/E ratio of -19.8571, while Dynex Capital, Inc. boasts a P/E of 18.2945, indicating a stark contrast in valuation. Additionally, Piedmont Office Realty Trust, Inc. has a P/E of -20.2016, also categorized as risky. The company's recent stock performance has lagged behind the S&P 500, with a year-to-date return of -16.30% compared to the index's 2.44%, reinforcing the notion of overvaluation.