Is Diamond Hill Investment Group, Inc. overvalued or undervalued?

As of 29 July 2025, the valuation grade for Diamond Hill Investment Group, Inc. moved from fair to very attractive, indicating a significant improvement in its perceived value. The company appears undervalued based on its P/E ratio of 9, which is notably lower than its peer Crescent Capital BDC, Inc. with a P/E of 13.31, and its EV to EBITDA ratio of 6.97, which is also more favorable compared to the peer average of 5.50. Additionally, the company's robust ROCE of 35.11% and ROE of 24.04% further underscore its strong financial performance relative to its valuation.
In terms of stock performance, Diamond Hill has underperformed against the S&P 500 across multiple time frames, with a year-to-date return of -7.96% compared to the S&P 500's 12.22%. This trend continues over one year and three years, where the company returned -10.44% and -19.45%, respectively, while the S&P 500 saw gains of 17.14% and 70.41%. These figures reinforce the notion that Diamond Hill Investment Group, Inc. is currently undervalued in the market.