Is CMI overvalued or undervalued?

As of 25 April 2023, the valuation grade for CMI has moved from does not qualify to risky, indicating a significant shift in its perceived financial health. The company is currently considered overvalued, particularly given its troubling financial ratios. Notably, CMI has a PE ratio of -0.66, an EV to EBITDA ratio of -260.39, and a ROCE of -4.14%, all of which highlight its negative performance metrics.
In comparison to its peers, CMI's financial standing appears precarious. For instance, Havells India, classified as expensive, has a PE ratio of 64.84, while Polycab India, also very expensive, has a PE ratio of 45.49. These comparisons further underscore CMI's unfavorable position within the industry. Additionally, the company's stock performance has lagged significantly behind the Sensex, with a year-to-date return of -31.20% compared to the Sensex's 5.61%.