Is Ingevity Corp. overvalued or undervalued?

As of 21 February 2024, the valuation grade for Ingevity Corp. has moved from expensive to risky, indicating a shift in market perception. The company appears to be overvalued based on its current metrics, particularly with a P/E ratio of 7, which is significantly lower than the peer average of 11.75 for similar companies. Additionally, the EV to EBITDA ratio stands at 7.91, while the industry average is higher, suggesting that the company may not be generating sufficient earnings relative to its enterprise value.
In comparison with peers, Eastman Chemical Co. has a more attractive P/E ratio of 15.68, while Element Solutions, Inc. shows a P/E of 24.64, further highlighting Ingevity's relative valuation challenges. Despite a strong return of 41.94% year-to-date compared to the S&P 500's 12.22%, the long-term performance reflects a decline of 9.68% over three years, contrasting sharply with the S&P's 70.41% increase, reinforcing the notion that Ingevity may be overvalued in the current market landscape.