Is iHeartMedia, Inc. overvalued or undervalued?

As of 3 November 2022, the valuation grade for iHeartMedia, Inc. moved from attractive to risky, indicating a shift in market perception. The company appears overvalued given its negative price-to-book value of -0.12 and a high EV to EBITDA ratio of 6.75, especially when compared to peers like Sinclair, Inc. with an EV to EBITDA of 5.64 and Gray Television, Inc. at 5.94. Additionally, the company's return on capital employed (ROCE) stands at 11.14%, which is not sufficient to justify its current valuation metrics.
In terms of stock performance, iHeartMedia has significantly outperformed the S&P 500 over the past year with a return of 89.57% compared to the S&P's 17.14%. However, the long-term returns are concerning, with a 3-year decline of -69.88% against the S&P's 70.41% gain, suggesting that the recent surge may not be sustainable. Overall, the combination of negative valuation ratios and poor long-term performance indicates that iHeartMedia, Inc. is overvalued in the current market environment.