Is Envista Holdings Corp. overvalued or undervalued?

As of 7 February 2024, the valuation grade for Envista Holdings Corp. has moved from fair to risky, indicating a shift in perception regarding its financial health and market position. The company is currently considered overvalued, with a P/E ratio of 73, significantly higher than its peers, such as Lantheus Holdings, which has a P/E of 14.54, and Bausch + Lomb Corp., which is also rated risky with a negative P/E. Additionally, Envista's EV to EBITDA stands at 25.79, further suggesting that the stock may not be justified at its current price.
The company's financial metrics reveal concerning trends, with a ROCE of only 4.03% and a ROE of 1.44%, which are well below industry standards. In comparison, Lantheus Holdings demonstrates a more favorable financial position with a robust valuation and lower multiples. Furthermore, Envista's recent stock performance has lagged behind the S&P 500, particularly over the longer term, with a 3-year return of -49.32% compared to the S&P's 58.74%. This combination of high valuation ratios and poor performance metrics reinforces the conclusion that Envista Holdings Corp. is overvalued in the current market.