Is GLOBALFOUNDRIES, Inc. overvalued or undervalued?

As of 11 February 2025, the valuation grade for GLOBALFOUNDRIES, Inc. has moved from expensive to risky, indicating a shift in perception regarding its valuation. Based on the current metrics, the company appears to be overvalued. The P/E ratio stands at 28, which is significantly higher than the peer average of approximately 22.07 for similar companies, while the EV to EBITDA ratio of 8.49 also suggests a premium compared to its peers, particularly when compared to ON Semiconductor Corp.'s 16.18.
In comparison to its peers, Microchip Technology, Inc. has a notably negative P/E ratio, while ON Semiconductor Corp. is categorized as expensive with a higher P/E ratio. Additionally, GLOBALFOUNDRIES' ROCE of 7.80% and ROE of 6.84% indicate less efficient capital utilization compared to industry standards. Over the past year, GLOBALFOUNDRIES has underperformed against the S&P 500, with a return of -15.08% compared to the index's 17.14%, reinforcing the notion that the stock may be overvalued.