Is Elme Communities overvalued or undervalued?

As of 27 October 2022, the valuation grade for Elme Communities has moved from attractive to risky, indicating a significant deterioration in its investment appeal. The company appears to be overvalued, particularly when considering its financial ratios. The Price to Book Value stands at 1.34, while the EV to EBITDA ratio is notably high at 12.00, and the ROCE is a mere 2.26%.
In comparison to its peers, Elme Communities is at a disadvantage; for instance, LTC Properties, Inc. has a P/E ratio of 17.18 and an EV to EBITDA of 9.73, while Ladder Capital Corp. shows a P/E of 13.17 and an EV to EBITDA of 2.50. These comparisons highlight that Elme Communities is not only lagging behind its peers but also reflects a concerning trend in its financial performance. The company's recent stock performance has underperformed the S&P 500, particularly over the longer term, reinforcing the notion of its overvaluation.