Is AtriCure, Inc. overvalued or undervalued?

As of 1 November 2022, AtriCure, Inc. moved from a fair to a risky valuation grade, indicating a shift towards a more negative outlook. The company appears to be overvalued given its current metrics, particularly with a Price to Book Value of 3.80 and an EV to Sales ratio of 3.53, which suggest that investors are paying a premium relative to its book value and sales. Additionally, the negative ROCE of -5.50% and ROE of -5.76% further highlight the company's struggles in generating returns.
In comparison to its peers, AtriCure's valuation ratios are concerning; for instance, Sanmina Corp. has a P/E ratio of 39.80, while AtriCure's valuation is classified as risky with a P/E ratio of -92.43. Other peers like iRhythm Technologies and Glaukos Corp. also reflect risky valuations, but AtriCure's metrics stand out for their extreme negativity. Despite a strong YTD return of 19.96%, AtriCure has underperformed the S&P 500 over the longer term, particularly in the 3Y and 5Y periods, where it lagged significantly behind the benchmark.