Is Forrester Research, Inc. overvalued or undervalued?

As of 5 November 2024, Forrester Research, Inc. has seen its valuation grade change from fair to risky, indicating a significant shift in its perceived value. The company is currently overvalued, with a P/E ratio of 130, which starkly contrasts with its peers such as CRA International, Inc. with a P/E of 24.60 and The Hackett Group, Inc. at 56.09. Additionally, Forrester's EV to EBITDA stands at 4.14, while CRA International's is 12.73, further highlighting the disparity in valuation metrics.
The company's financial ratios reveal concerning trends, including a low ROE of 1.33% and a relatively high EV to Capital Employed ratio of 2.78. These figures suggest inefficiencies in generating returns on equity compared to its peers. Furthermore, Forrester's stock performance has lagged significantly behind the S&P 500, with a year-to-date decline of 38.35% compared to the index's modest gain of 2.44%. This underperformance, combined with the high valuation ratios, reinforces the conclusion that Forrester Research, Inc. is currently overvalued.