Is Array Technologies, Inc. overvalued or undervalued?

As of 7 November 2024, Array Technologies, Inc. has moved from an attractive to a risky valuation grade. The company is currently considered overvalued based on its financial ratios and peer comparisons. The P/E ratio stands at 11, which is significantly lower than peers such as Cirrus Logic, Inc. with a P/E of 15.99, indicating potential overvaluation when compared to industry standards. Additionally, Array's EV to EBITDA ratio of 8.91 and ROE of 31.74% suggest that while the company is generating returns, its valuation metrics do not support a favorable investment outlook.
In comparison to its peers, Array Technologies, Inc. is positioned unfavorably against companies like Diodes, Inc., which has a more attractive valuation profile. The stock has underperformed the S&P 500 over the past year, with a return of -34.54% compared to the index's 10.26%. This performance, coupled with the recent downgrade in valuation grade, reinforces the conclusion that Array Technologies, Inc. is currently overvalued.