Is FARO Technologies, Inc. overvalued or undervalued?

As of 16 February 2022, the valuation grade for FARO Technologies, Inc. moved from fair to risky, indicating a shift towards a more negative outlook. The company appears overvalued based on its high valuation ratios, including a P/E ratio of 263, an EV to EBITDA of 45.93, and a PEG ratio of 2.37. In comparison, ACM Research, Inc. is considered very attractive with a P/E of 12.76 and an EV to EBITDA of 9.59, highlighting the significant disparity in valuation metrics.
FARO's return performance has been mixed; while it achieved a remarkable YTD return of 73.46% compared to the S&P 500's 12.22%, it has also underperformed over the longer term, with a 5Y return of -22.11% against the S&P's 96.61%. This inconsistent performance, coupled with its high valuation ratios, reinforces the conclusion that FARO Technologies, Inc. is overvalued.