Is FormFactor, Inc. overvalued or undervalued?

As of 29 July 2025, the valuation grade for FormFactor, Inc. has moved from expensive to very expensive. The company is currently overvalued, as indicated by its P/E ratio of 44, which is significantly higher than its peer Tower Semiconductor Ltd. at 37.63 and Cirrus Logic, Inc. at 17.26. Additionally, the EV to EBITDA ratio stands at 24.35, further highlighting the premium valuation compared to its peers.
FormFactor's ROCE is 7.17% and ROE is 5.87%, which do not justify the high valuation multiples it commands. The stock has shown a 1-week return of 17.89%, outperforming the S&P 500's 1.05% return, but over the longer term, it has underperformed with a year-to-date return of -18.09% compared to the S&P 500's 12.22%. This performance reinforces the notion that the stock is overvalued relative to its financial metrics and peer comparisons.