Is Electro-Sensors, Inc. overvalued or undervalued?

As of 8 September 2025, the valuation grade for Electro-Sensors, Inc. moved from fair to expensive, indicating a shift towards overvaluation. The company appears overvalued based on its P/E ratio of 15, which is higher than the peer average of approximately 14.05 for Profire Energy, Inc., and a PEG ratio of 1.21, suggesting that growth expectations may not justify the current price. Additionally, the EV to EBITDA ratio of 4.70 also points to a premium valuation compared to peers like Babcock & Wilcox Enterprises, Inc., which has a negative EV to EBITDA.
In terms of performance, Electro-Sensors has had mixed returns, with a 1-year return of 22.56% compared to the S&P 500's 17.14%, but a significant decline of -15.40% over three years against the S&P 500's impressive 70.41% return. This disparity reinforces the notion that while the stock has shown some short-term strength, its longer-term performance has lagged significantly behind the broader market, further supporting the conclusion that it is currently overvalued.