Is Enhabit, Inc. overvalued or undervalued?

As of 9 August 2023, the valuation grade for Enhabit, Inc. has moved from attractive to risky, indicating a shift in perceived value. The company appears to be overvalued given its current P/E ratio of 22, which is higher than the peer average of 19.25, and an EV to EBITDA ratio of 12.62 compared to peers like Addus HomeCare Corp. at 16.20. Additionally, the PEG ratio of 0.05 suggests that the stock may not be adequately priced relative to its growth potential.
In comparison to its peers, Enhabit, Inc. shows lower returns on capital with a ROCE of 4.95% and ROE of 4.64%. Notably, Pediatrix Medical Group, Inc. is also classified as risky but has a significantly lower P/E of 7.64, highlighting the disparity in valuation among similar companies. The recent stock performance has been underwhelming, with a year-to-date return of 18.82% compared to the S&P 500's 2.44%, but the longer-term view shows a concerning decline over three years, down 62.88%. Overall, Enhabit, Inc. is currently overvalued based on its financial ratios and peer comparisons.