Is Grocery Outlet Holding Corp. overvalued or undervalued?

As of 10 June 2025, Grocery Outlet Holding Corp. has moved from a fair valuation to a very expensive rating. The company is currently considered overvalued based on its financial metrics. The P/E ratio stands at 24, which is higher than the peer average of approximately 23.3 for companies like PriceSmart, Inc. and Weis Markets, Inc. Additionally, the EV to EBITDA ratio of 19.31 is significantly above the peer average of around 9.1, indicating a premium valuation compared to its peers.
The company's return on equity (ROE) is 4.81%, which is relatively low, suggesting inefficiencies in generating profit from shareholders' equity. The price to book value of 1.14 also reflects a premium over book value, further supporting the conclusion of overvaluation. Notably, Grocery Outlet's stock has underperformed the S&P 500 over various time frames, particularly with a year-to-date decline of 11.21% compared to a 2.44% increase in the index, reinforcing the notion that the current valuation may not be justified.