Is CompoSecure, Inc. overvalued or undervalued?

As of 10 March 2022, the valuation grade for CompoSecure, Inc. has moved from expensive to risky, indicating a shift in perception regarding its valuation. The company is currently considered overvalued, particularly given its P/E ratio of 18, which is significantly lower than peers like Warner Music Group Corp. at 27.05 and Cimpress Plc at 80.96. Additionally, CompoSecure's EV to EBITDA ratio stands at 15.53, which is more favorable than Cimpress's 10.93 but still reflects a premium compared to its own historical performance.
In terms of peer comparison, CompoSecure's valuation metrics suggest it is not aligned with industry standards, especially with a negative Price to Book Value of -16.31 and EV to Capital Employed also at -14.61. These figures highlight the company's struggles relative to its competitors, such as Deluxe Corp., which boasts a much lower P/E ratio of 9.65 and a more favorable EV to EBITDA of 6.01. Notably, CompoSecure has outperformed the S&P 500 across multiple time frames, with a year-to-date return of 58.29% compared to the S&P 500's 12.22%, reinforcing the notion that while the stock has shown strong short-term performance, its long-term valuation remains questionable.