Is Eurodry Ltd. overvalued or undervalued?

As of 15 February 2024, the valuation grade for Eurodry Ltd. has moved from expensive to risky, indicating a shift in perception regarding its financial health. The company appears to be overvalued based on its current metrics, particularly given its Price to Book Value of 0.25 and an EV to EBITDA ratio of 12.78, which suggests a high valuation relative to earnings before interest, taxes, depreciation, and amortization. Additionally, the negative ROCE of -2.30% and ROE of -10.30% further highlight the challenges the company faces in generating returns.
In comparison to peers, Eurodry Ltd.'s EV to EBITDA of 12.78 is significantly higher than Euroseas Ltd.'s attractive ratio of 3.8090, indicating that Eurodry is trading at a premium despite its risky classification. Furthermore, Grindrod Shipping Holdings Ltd., also rated risky, shows an EV to EBITDA of 6.1469, reinforcing the notion that Eurodry may not be a favorable investment at its current price of 13.00. While Eurodry has outperformed the S&P 500 in the short term with a 1-month return of 26.71% compared to 2.33%, its long-term performance is concerning, with a 1-year return of -35.32% versus the S&P 500's 17.14%.