Is GE Aerospace overvalued or undervalued?

As of 22 July 2024, GE Aerospace's valuation grade has moved from expensive to very expensive, indicating a significant increase in perceived valuation. The company is currently considered overvalued based on its high ratios, including a P/E ratio of 134, a Price to Book Value of 53.89, and an EV to EBITDA of 124.29. These figures starkly contrast with peers such as Applied Materials, Inc., which has a P/E of 47.71, and Parker-Hannifin Corp., with a P/E of 33.82, highlighting the premium at which GE Aerospace is trading.
The company's robust ROE of 40.18% and a dividend yield of 8.85% may suggest strong performance; however, the elevated valuation metrics raise concerns about sustainability. Additionally, GE Aerospace has outperformed the S&P 500 significantly over the past year, with a stock return of 50.88% compared to the index's 10.26%. This performance, while impressive, does not mitigate the fact that the stock appears overvalued relative to its earnings and cash flow metrics.