Is Blackbaud, Inc. overvalued or undervalued?

As of 18 February 2025, the valuation grade for Blackbaud, Inc. has moved from attractive to risky, indicating a significant downgrade in its investment appeal. The company appears to be overvalued, particularly given its high Price to Book Value of 120.34 and an EV to EBITDA ratio of 19.61, which are stark contrasts to its negative P/E ratio due to losses. Additionally, its ROCE stands at 14.64%, but the ROE is alarmingly low at -782.91%, reflecting severe inefficiencies.
In comparison to its peers, Blackbaud's metrics are concerning; for instance, while Dolby Laboratories, Inc. has a P/E of 25.89, Blackbaud's valuation is marked as risky with a P/E of -16.53. Other peers like SentinelOne, Inc. also show negative P/E ratios, but Blackbaud's overall financial health appears weaker. Over the past year, Blackbaud's stock has returned -18.78%, significantly underperforming the S&P 500's 17.14%, reinforcing the notion that it is currently overvalued.