Is Charles River Laboratories International, Inc. overvalued or undervalued?

As of 7 May 2025, the valuation grade for Charles River Laboratories International, Inc. has moved from fair to risky, indicating a shift in perception regarding its financial health and market position. The company is currently assessed as overvalued, with a P/E ratio of 22, which is higher than its peer WEX, Inc. that has a P/E of 20.11. Additionally, the EV to EBITDA ratio stands at 10.30, which is comparable to the industry but suggests potential overvaluation given the company's recent performance.
In terms of profitability, Charles River's ROCE is 9.44% and ROE is 9.99%, which are relatively modest figures that do not justify its current valuation levels. The company has also underperformed compared to the S&P 500, with a year-to-date return of -20.16% versus the index's 2.44%. This underperformance, combined with the high valuation ratios, reinforces the conclusion that Charles River Laboratories is overvalued in the current market environment.