Is Elme Communities overvalued or undervalued?

As of 27 October 2022, Elme Communities' valuation grade changed from fair to risky, indicating a shift towards overvaluation concerns. The company appears overvalued, particularly given its negative P/E ratio and low ROE of -1.32%. Key valuation ratios include a Price to Book Value of 1.34, an EV to EBITDA of 12.00, and an EV to Sales of 5.81, which suggest that the company's valuation metrics are not favorable compared to its peers.
In comparison to its peers, Elme Communities has a significantly higher EV to EBITDA ratio than Acadia Realty Trust at 11.33 and LTC Properties, Inc. at 10.72, both of which are categorized as very attractive. Furthermore, Elme's stock has underperformed against the S&P 500 over multiple periods, with a 1Y return of -6.57% compared to the S&P 500's 17.14%, reinforcing the notion that the stock may be overvalued.