Is DoubleVerify Holdings, Inc. overvalued or undervalued?

As of 4 March 2025, the valuation grade for DoubleVerify Holdings, Inc. has moved from expensive to very expensive, indicating a significant shift in its perceived value. The company is currently overvalued, with a P/E ratio of 46, which is notably higher than its peer average, such as Duolingo, Inc. at 221.64 and ZoomInfo Technologies, Inc. at 40.29. Additionally, DoubleVerify's EV to EBITDA stands at 17.21, which again surpasses many peers, suggesting a premium valuation relative to its earnings potential.
In terms of return on equity (ROE) and return on capital employed (ROCE), DoubleVerify reports 5.04% and 9.57%, respectively, which are relatively low compared to industry standards. This underperformance, combined with its high valuation metrics, reinforces the conclusion that the stock is overvalued. Furthermore, the company's stock has underperformed the S&P 500 over various time frames, including a year-to-date decline of 24.26% versus the S&P 500's gain of 2.44%, further supporting the notion of overvaluation.