Is Designer Brands, Inc. overvalued or undervalued?

As of 11 September 2024, the valuation grade for Designer Brands, Inc. has moved from expensive to risky, indicating a deterioration in its valuation outlook. The company appears to be overvalued based on its current metrics, with a P/E ratio of 25, which is significantly higher than the peer average of 6.31 for PRA Group, Inc., a very attractive competitor. Additionally, Designer Brands has an EV to EBITDA ratio of 8.94, while its peers like Conduent, Inc. are at 7.91, further supporting the overvaluation assessment.
In terms of returns, Designer Brands has underperformed compared to the S&P 500 across multiple periods, including a staggering -73.48% return over the past three years versus the S&P 500's 70.41% gain. This stark contrast reinforces the notion that the stock is not only overvalued but also struggling to deliver value to its shareholders.