Is Dollar Tree, Inc. overvalued or undervalued?

As of 26 March 2025, Dollar Tree, Inc. has moved from a risky to a very expensive valuation grade, indicating a significant shift in its perceived value. The company is currently considered overvalued. Key financial ratios include a P/E ratio of 18, an EV to EBITDA of 10.97, and a Price to Book Value of 5.05.
In comparison to its peers, Dollar General Corp. has a P/E ratio of 21.61, while Costco Wholesale Corp. stands at 55.28, both highlighting that Dollar Tree's valuation is on the higher end despite its lower growth prospects. Additionally, while Dollar Tree has shown a year-to-date return of 34.12%, it still lags behind the S&P 500's return of 2.44% for the same period, reinforcing the notion that the stock may be overvalued relative to its performance.