Is Citi Trends, Inc. overvalued or undervalued?

As of 28 November 2023, Citi Trends, Inc. has moved from a fair to a risky valuation grade. The company appears to be overvalued given its significant negative financial metrics, including a price-to-book value of 4.88 and an EV to EBITDA ratio of -48.29. Additionally, the return on equity (ROE) stands at a concerning -33.41%, indicating substantial losses relative to shareholder equity.
In comparison to its peers, Citi Trends shows stark contrasts; for instance, Shoe Carnival, Inc. has a P/E ratio of 12.12 and an EV to EBITDA of 6.80, categorizing it as attractive, while Stitch Fix, Inc. is also rated risky with a P/E of -17.76. The notable outlier metrics for Citi Trends, particularly its negative EV to EBIT of -12.87, further emphasize its overvaluation status. Despite a recent strong performance against the S&P 500, with a year-to-date return of 14.13% compared to the index's 2.44%, the underlying financial health suggests that the stock is not a sound investment at its current price.