Is Floor & Decor Holdings, Inc. overvalued or undervalued?

As of 3 August 2023, the valuation grade for Floor & Decor Holdings, Inc. has moved from expensive to very expensive, indicating a significant shift in its market perception. The company is currently overvalued, with a P/E ratio of 38, which is notably higher than the industry average. Additionally, the EV to EBITDA ratio stands at 14.62, further emphasizing the elevated valuation metrics.
In comparison to its peers, Floor & Decor's P/E ratio of 38.35 is substantially above the industry standard, while its EV to EBITDA ratio also reflects a premium at 14.92. The company's return on capital employed (ROCE) is 12.67%, and return on equity (ROE) is 9.21%, which, while respectable, do not justify the current high valuation levels. Furthermore, the stock has underperformed against the S&P 500 over the past year, declining by 34.07% compared to the index's gain of 10.26%, reinforcing the notion that the stock may be overvalued at its current price of $75.60.