Is Forward Air Corp. overvalued or undervalued?

As of 8 May 2024, the valuation grade for Forward Air Corp. has moved from expensive to risky, indicating a significant deterioration in its market position. The company is currently overvalued, as reflected by its high Price to Book Value of 3.68 and an EV to EBIT ratio of 62.45, which suggests that investors are paying a premium for its earnings potential that is not being realized. Additionally, the company's ROE stands at a troubling -44.52%, further emphasizing its financial struggles.
In comparison to peers, J.B. Hunt Transport Services, Inc. has a P/E ratio of 40.85, while Knight-Swift Transportation Holdings, Inc. shows a more reasonable EV to EBITDA of 8.11, highlighting that Forward Air Corp. is significantly lagging behind in terms of valuation metrics. The company's stock has underperformed dramatically, with a 1-year return of -26.32% compared to the S&P 500's 17.14%, and a staggering -70.67% over three years versus the S&P's 70.41%. This stark contrast reinforces the notion that Forward Air Corp. is currently overvalued in the market.