Is Dynatrace, Inc. overvalued or undervalued?

As of 14 May 2025, the valuation grade for Dynatrace, Inc. moved from fair to attractive, indicating a positive shift in its perceived value. The company appears to be undervalued, supported by a P/E ratio of 34, a PEG ratio of 0.16, and an EV to EBITDA ratio of 67.61, which suggest that it is trading at a discount relative to its growth prospects. In comparison to peers, Dynatrace's P/E ratio is more favorable than Paycom Software, Inc., which has a P/E of 33.53, while its EV to EBITDA is significantly higher than Paycom's 16.85.
Despite the attractive valuation, Dynatrace has underperformed against the S&P 500 over the past year, with a return of -6.23% compared to the index's 17.14%. However, over the longer term, the company has shown resilience with a 3-year return of 30.19% versus the S&P 500's 70.41%. This suggests that while the stock may currently be undervalued, its recent performance relative to the market could be a point of concern for investors.