Is Carpenter Technology Corp. overvalued or undervalued?

As of 27 March 2025, Carpenter Technology Corp. has moved from a valuation grade of very expensive to expensive. The company is currently considered overvalued based on its high P/E ratio of 38 compared to the industry average, which is not provided but can be inferred to be lower given the peer comparisons. The EV to EBITDA ratio stands at 23.11, indicating a premium valuation, while the PEG ratio of 0.22 suggests that the stock may be undervalued in terms of growth potential, despite its overall expensive classification.
In comparison to its peers, Carpenter Technology Corp. has a significantly higher P/E ratio than MP Materials Corp. and Uranium Energy Corp., which are both classified as risky with negative P/E ratios. The company's return on equity (ROE) of 21.10% and return on capital employed (ROCE) of 21.72% are strong indicators of operational efficiency, yet they do not justify the current valuation levels. Notably, Carpenter Technology has outperformed the S&P 500 significantly over the past year with a return of 162.82% compared to the index's 10.26%, which may contribute to the inflated valuation perception.