Is Franklin Street Properties Corp. overvalued or undervalued?

As of 7 November 2023, the valuation grade for Franklin Street Properties Corp. has moved from expensive to risky, indicating a shift in perception regarding its financial health and market position. The company appears to be overvalued given its current metrics, particularly with a Price to Book Value of 0.29 and an EV to EBITDA ratio of 4.28, which suggests that the market is pricing the stock higher than its underlying asset value. Additionally, the negative ROE of -10.37% and ROCE of -1.30% further highlight the company's struggles in generating returns.
In comparison to peers, Franklin Street Properties Corp. has a significantly lower EV to EBITDA ratio than Transcontinental Realty Investors, Inc. at 43.83 and Postal Realty Trust, Inc. at 9.60, both of which are classified as attractive. This stark contrast indicates that the company is not only underperforming relative to its peers but also carries a higher risk profile. Furthermore, the stock has underperformed against the S&P 500 across multiple time frames, with a year-to-date return of -9.84% compared to the S&P 500's 12.22%, reinforcing the notion that the stock is overvalued in its current state.