Is Bandwidth, Inc. overvalued or undervalued?

As of 28 February 2024, the valuation grade for Bandwidth, Inc. has moved from fair to risky, indicating a significant shift in its financial outlook. The company is currently deemed overvalued, with a Price to Book Value of 1.29 and an EV to EBITDA ratio of 17.68, which is notably high given its negative earnings. Additionally, the company has a ROCE of -2.55% and a ROE of -3.58%, further highlighting its struggles in generating returns.
In comparison to its peers, Bandwidth, Inc. has a P/E ratio of -33.99, while Domo, Inc. and 8x8, Inc. have P/E ratios of -7.30 and -14.49, respectively, illustrating that Bandwidth is underperforming relative to its competitors. The recent stock performance shows that Bandwidth has underperformed against the S&P 500, with a year-to-date return of -17.39% compared to the index's 2.44%. This combination of poor financial ratios and underwhelming stock performance reinforces the view that Bandwidth, Inc. is currently overvalued.