Is Enhabit, Inc. overvalued or undervalued?

As of 9 August 2023, the valuation grade for Enhabit, Inc. has moved from expensive to risky, indicating a shift in perception regarding its valuation. The company appears to be overvalued based on its current metrics, with a P/E ratio of 22, which is significantly higher than its peer Fulgent Genetics, Inc., which has a negative P/E of -21.28. Additionally, Enhabit’s EV to EBITDA stands at 12.62, while its peer shows a negative ratio of -8.07, further emphasizing the relative overvaluation.
In comparison to the broader market, Enhabit has underperformed against the S&P 500, with a year-to-date return of 3.2% compared to the S&P's 12.22%. This trend is also reflected in the three-year return, where Enhabit declined by 45.87% versus the S&P's gain of 70.41%. Overall, the combination of high valuation ratios and poor stock performance suggests that Enhabit, Inc. is currently overvalued in the market.