Is Epsilon Energy Ltd. overvalued or undervalued?

As of 18 June 2025, the valuation grade for Epsilon Energy Ltd. has moved from very expensive to expensive, indicating a shift in perception regarding its market pricing. The company is currently assessed as overvalued, with a P/E ratio of 23, which is significantly higher than the peer average of 25.46 for comparable companies. Key ratios include an EV to EBITDA of 6.93 and a PEG ratio of 0.41, suggesting that while earnings growth may be favorable, the current price does not justify the earnings potential.
In comparison to its peers, Epsilon Energy Ltd. stands out with a higher P/E ratio than Riley Exploration Permian, Inc. at 4.98 and VAALCO Energy, Inc. at 9.99, both of which are considered very attractive. The company's return performance has been strong, with a year-to-date return of 29.95%, significantly outpacing the S&P 500's 2.44% during the same period. However, despite this positive performance, the high valuation metrics suggest that Epsilon Energy Ltd. is priced above its intrinsic value relative to its peers.