Is Ciena Corp. overvalued or undervalued?

As of 6 June 2024, Ciena Corp. has moved from an expensive to a very expensive valuation grade. The company is currently considered overvalued. Key ratios include a P/E ratio of 96, an EV to EBITDA ratio of 30.35, and a Price to Book Value of 3.70. In comparison, Ubiquiti, Inc. has a P/E ratio of 41.78 and InterDigital, Inc. boasts a P/E of 37.84, highlighting that Ciena's valuation significantly exceeds its peers.
Despite a strong one-year stock return of 55.71% compared to the S&P 500's 10.26%, the high valuation metrics suggest that Ciena may not sustain its current price levels. With a ROCE of 6.94% and ROE of 3.87%, the company's returns do not justify its elevated valuation, reinforcing the conclusion that it is overvalued in the current market environment.