Is Herbalife Ltd. overvalued or undervalued?

As of 22 February 2018, the valuation grade for Herbalife Ltd. has moved from fair to risky, indicating a shift in perception regarding its investment potential. The company appears to be overvalued based on its current metrics, particularly with a P/E ratio of 3, which is significantly lower than peers like Henry Schein, Inc. at 16.00 and Patterson Cos., Inc. at 19.39. Additionally, the EV to EBITDA ratio stands at 4.95, which is less favorable compared to Sally Beauty Holdings, Inc. at 5.46, further suggesting that Herbalife's valuation does not align well with its industry counterparts.
The PEG ratio of 0.06 indicates that the stock may be undervalued relative to its growth expectations, but the negative book value (ROE) complicates the valuation picture. Furthermore, while Herbalife has shown a strong year-to-date return of 38.71% compared to the S&P 500's 12.22%, its long-term performance has been poor, with a 5-year return of -80.80% versus the S&P 500's 96.61%. This stark contrast in performance underscores the risks associated with investing in Herbalife at its current valuation.