Is Electro-Sensors, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Electro-Sensors, Inc. has moved from very attractive to expensive, indicating a shift towards overvaluation. The company appears overvalued based on its current P/E ratio of 15, which is higher than the peer average of approximately 14.05 for Profire Energy, Inc., and its EV to EBITDA ratio of 4.70, which is also elevated compared to the industry. Additionally, the PEG ratio stands at 1.21, suggesting that the stock may not be growing at a rate that justifies its current price.
In comparison to peers, Electro-Sensors, Inc. has a P/E ratio of 16.69, which is significantly higher than that of Profire Energy, Inc. at 14.05, indicating a premium valuation. This is further emphasized by the company's negative ROCE of -1.69% and a low ROE of 2.59%, which reflect poor profitability relative to its equity. Over the past year, the stock has returned 21.56%, outperforming the S&P 500's return of 14.08%, but this performance is overshadowed by its negative returns over longer periods, such as a -9.44% YTD return compared to the S&P 500's 13.30%.