Is Chicago Atlantic Real Estate Finance, Inc. overvalued or undervalued?

As of 7 May 2025, the valuation grade for Chicago Atlantic Real Estate Finance, Inc. has moved from attractive to very attractive. The company appears to be undervalued, with a P/E ratio of 8, significantly lower than the industry average, which is not provided but can be inferred to be higher given the peer comparisons. Additionally, the price to book value stands at 0.97, and the EV to EBITDA ratio is 6.40, indicating that the company is trading at a discount relative to its earnings potential.
In comparison to its peers, Chicago Atlantic's P/E ratio of 7.75 is notably lower than Orchid Island Capital, Inc. at 21.15 and One Liberty Properties, Inc. at 17.89, both of which are also classified as very attractive. The company's return on capital employed (ROCE) is 15.11%, and return on equity (ROE) is 12.34%, suggesting solid profitability metrics. Despite recent underperformance compared to the S&P 500, where the stock has declined 8.5% over the past year while the index gained 10.26%, the current valuation indicates a strong potential for upside.