Is Donaldson Co., Inc. overvalued or undervalued?

As of 27 February 2025, the valuation grade for Donaldson Co., Inc. has moved from expensive to very expensive, indicating a significant shift in its perceived value. The company is currently considered overvalued. Key ratios include a P/E ratio of 24, a Price to Book Value of 6.95, and an EV to EBITDA of 16.00, all of which suggest that the stock is trading at a premium compared to its earnings and assets.
In comparison to its peers, Donaldson's P/E ratio of 24 is notably higher than that of Aptiv Plc at 7.26 and Autoliv, Inc. at 15.26, both of which are categorized as expensive. Additionally, the PEG ratio of 4.61 further emphasizes the overvaluation, especially when compared to Allison Transmission Holdings, Inc., which has a PEG ratio of 0.72 and is rated as attractive. While Donaldson has shown positive returns in the short term, its long-term performance lags behind the S&P 500, with a 1-year return of -4.33% compared to the index's 10.26%.