Is e.l.f. Beauty, Inc. overvalued or undervalued?

As of 22 November 2023, the valuation grade for e.l.f. Beauty, Inc. has moved from expensive to very expensive, indicating a significant shift in its market perception. The company is currently deemed overvalued, with a P/E ratio of 59, which is substantially higher than its peers such as The Clorox Co. at 23.58 and Reynolds Consumer Products, Inc. at 12.89. Additionally, e.l.f. Beauty's EV to EBITDA stands at 33.29, compared to The Clorox Co.'s 14.08, further highlighting the disparity in valuation.
The company's return on capital employed (ROCE) is 18.08% and return on equity (ROE) is 14.79%, which are respectable figures but do not justify the high valuation multiples when compared to its peers. Recent performance shows that e.l.f. Beauty has underperformed the S&P 500 over the past year, with a stock return of -40.21% versus the S&P 500's 10.26%. This trend reinforces the view that the stock is overvalued in the current market environment.