Is Capital Southwest Corp overvalued or undervalued?

As of 1 February 2021, the valuation grade for Capital Southwest Corp moved from risky to very attractive. Based on the current metrics, the company appears to be undervalued. The P/E ratio stands at 17, which is favorable compared to peers like Victory Capital Holdings, Inc. with a P/E of 15.76, and Sixth Street Specialty Lending, Inc. at 12.44. Additionally, the EV to EBITDA ratio of 8.07 is competitive against the industry, with peers like TPG, Inc. showing an expensive EV to EBITDA of 68.96.
The company also boasts a high dividend yield of 33.43% and a solid ROCE of 16.07%, indicating strong operational efficiency. While Capital Southwest Corp has underperformed the S&P 500 over the past year with a return of -9.22% compared to 17.14%, it has shown resilience with a 63.23% return over the last five years, suggesting potential for recovery and growth.