Is Avanos Medical, Inc. overvalued or undervalued?

As of 26 February 2025, the valuation grade for Avanos Medical, Inc. has moved from attractive to risky, indicating a shift in perception regarding its investment potential. The company appears to be overvalued based on its current metrics, with a P/E ratio of 9, an EV to EBITDA of 6.23, and a PEG ratio of 0.12, which suggests that despite a low valuation in terms of earnings, the growth prospects may not justify the current price.
In comparison to peers, Avanos Medical's P/E ratio of 9.80 is higher than that of Paragon 28, Inc. at -20.38, but lower than Myriad Genetics, Inc. at -11.75, indicating that while it is relatively better positioned, the overall industry sentiment remains negative. The company's stock has underperformed significantly against the S&P 500, with a 1-year return of -49.28% compared to the index's 17.14%, reinforcing the notion of overvaluation amidst a challenging market environment.