Is Cencora, Inc. overvalued or undervalued?

As of 5 February 2025, Cencora, Inc. has moved from a fair valuation to an expensive one. The company is currently overvalued, with a P/E ratio of 44, significantly higher than its peers such as Cardinal Health, Inc. at 28.26 and McKesson Corp. at 57.12. Additionally, Cencora's Price to Book Value stands at 78.87, which further indicates a premium valuation compared to the industry standards.
In terms of performance metrics, Cencora boasts a remarkable ROE of 177.43% and a ROCE of 47.11%, but these high returns are overshadowed by its elevated valuation ratios. The EV to EBITDA ratio is 20.00, while its EV to EBIT is 26.89, both of which are higher than typical industry benchmarks. Despite a strong stock performance relative to the S&P 500, with a year-to-date return of 30.47% compared to 2.44% for the index, the current valuation suggests that investors may be overpaying for future growth potential.