Is H&E Equipment Services, Inc. overvalued or undervalued?

As of 18 February 2025, the valuation grade for H&E Equipment Services, Inc. has moved from expensive to very expensive, indicating a significant increase in perceived overvaluation. The company appears to be overvalued based on its P/E ratio of 34, which is notably higher than peers like Mr. Cooper Group, Inc. with a P/E of 29.22 and PennyMac Financial Services, Inc. at 16.19. Additionally, the EV to EBITDA ratio stands at 7.74, while its EV to Sales ratio is 3.29, both suggesting elevated valuation levels compared to industry standards.
Given these metrics and the recent performance, H&E Equipment Services, Inc. is considered overvalued. The company's stock has outperformed the S&P 500, with a year-to-date return of 93.3% compared to the index's 12.22%, and a one-year return of 99.41% versus 17.14%. This strong performance may contribute to the inflated valuation, but the high ratios indicate that the stock price may not be sustainable at these levels.