Is Clearwater Analytics Holdings, Inc. overvalued or undervalued?

As of 12 May 2025, Clearwater Analytics Holdings, Inc. has moved from a very attractive to an attractive valuation grade. The company appears to be overvalued at its current price of $21.65, especially when considering its P/E ratio of 14 compared to peers like Sportradar Group AG with a P/E of 110.21 and AvidXchange Holdings, Inc. at 559.38. Additionally, Clearwater's EV to EBITDA ratio stands at 139.11, which is significantly higher than the industry average, indicating a potential overvaluation.
In terms of key financial metrics, Clearwater Analytics has a ROE of 44.55% and a ROCE of 3.86%, which are noteworthy but do not sufficiently justify its current valuation. The company's valuation is further contrasted with peers such as ePlus, Inc., which has a P/E of 17.87 and is also considered attractive. Despite a strong one-year return of 13.95% compared to the S&P 500's 10.26%, the overall metrics suggest that Clearwater Analytics is not positioned favorably in the current market landscape.