Is Freshpet, Inc. overvalued or undervalued?

As of 10 June 2025, Freshpet, Inc. has moved from an attractive to an expensive valuation grade, indicating a shift towards overvaluation. The company is currently deemed overvalued, with a P/E ratio of 120, significantly higher than peers such as Balchem Corp. at 37.98 and Lancaster Colony Corp. at 25.39. Additionally, Freshpet's EV to EBITDA stands at 36.23, which is also elevated compared to the industry averages.
In terms of performance metrics, Freshpet's ROCE is a mere 3.01% and ROE is at 3.10%, suggesting inefficiencies in generating returns relative to its equity and capital employed. The PEG ratio of 0.52 indicates potential growth, but the high P/E ratio raises concerns about sustainability. Notably, Freshpet's stock has underperformed against the S&P 500, with a year-to-date return of -51.66% compared to the index's 2.44%, reinforcing the view of overvaluation in the current market context.