Is BigBear.ai Holdings, Inc. overvalued or undervalued?

As of 17 March 2022, the valuation grade for BigBear.ai Holdings, Inc. moved from does not qualify to risky, indicating increased caution regarding its financial health. The company appears to be overvalued, given its high Price to Book Value of 5.86 and negative EV to EBIT and EV to EBITDA ratios of -21.34 and -28.03, respectively, which highlight significant operational challenges. Additionally, the company's Return on Capital Employed (ROCE) and Return on Equity (ROE) are notably negative at -28.07% and -34.35%, respectively, further underscoring its financial difficulties.
In comparison to peers, BigBear.ai's EV to EBITDA ratio of -36.84 is significantly worse than the industry average, indicating that it is underperforming relative to its competitors. Notable peers include companies with healthier financial metrics, which suggests that BigBear.ai is struggling to maintain competitiveness in the software products industry. Despite this, the company has shown strong stock performance, with a 1-year return of 302.56% compared to the S&P 500's 17.14%, reflecting a potential market overreaction to its recent performance rather than a sustainable valuation.