Is AXT, Inc. overvalued or undervalued?

As of 3 August 2023, AXT, Inc. has moved from a fair to risky valuation grade. The company is currently assessed as overvalued, given its significant financial challenges. Key ratios highlight this situation: the Price to Book Value stands at 0.44, while the EV to EBITDA is at -7.55, indicating negative earnings before interest, taxes, depreciation, and amortization. Additionally, the Return on Capital Employed (ROCE) is at -10.87%, reflecting poor operational efficiency.
In comparison to its peers, AXT, Inc. shows a stark contrast with Benchmark Electronics, Inc., which has a fair valuation with a P/E ratio of 22.81 and an EV to EBITDA of 8.49. Kimball Electronics, Inc. is also in a better position with a P/E of 21.06 and an EV to EBITDA of 7.02, further emphasizing AXT's struggles. The company's stock performance has been disappointing, with a year-to-date return of -14.29%, significantly underperforming the S&P 500's 2.44% return.