Is Informatica, Inc. (California) overvalued or undervalued?

As of 20 March 2025, the valuation grade for Informatica, Inc. has moved from expensive to attractive, indicating a significant shift in its perceived value. The company is currently considered undervalued based on its high P/E ratio of 1604, which stands in stark contrast to peers like Toast, Inc. with a P/E of 145.27 and Qualys, Inc. at 27.97. Additionally, Informatica's EV to EBITDA ratio is 29.80, which is comparable to Toast's 125.41, suggesting that while Informatica's valuation appears high, it is relatively more attractive within its peer group.
Informatica's return on capital employed (ROCE) is 5.89%, and its return on equity (ROE) is a mere 0.23%, indicating potential inefficiencies in generating returns. Despite these ratios, the company's stock has underperformed compared to the S&P 500 over the past year, with a decline of 21.08% versus the index's gain of 10.26%. This context reinforces the notion that Informatica may be undervalued, particularly as it navigates a challenging market landscape.