Is InnovAge Holding Corp. overvalued or undervalued?

As of 13 September 2022, the valuation grade for InnovAge Holding Corp. moved from attractive to risky, indicating a significant deterioration in its financial outlook. The company is currently overvalued, as evidenced by its negative P/E ratio and troubling financial metrics. The Price to Book Value stands at 2.28, while the EV to EBITDA ratio is at 25.90, suggesting that investors are paying a premium for the company's earnings potential, which is currently not being realized.
In comparison to peers, InnovAge's EV to EBIT ratio is an alarming -320.20, while Phreesia, Inc. and Everbridge, Inc. have EV to EBITDA ratios of -118.76 and 99.69, respectively, highlighting that InnovAge is underperforming its competitors. Additionally, the company's return on capital employed (ROCE) and return on equity (ROE) are both negative at -0.77% and -0.71%, respectively, further reinforcing the notion that it is overvalued. Despite a recent uptick in stock price, the long-term performance shows a decline of 16.42% over the past year compared to a 10.26% gain in the S&P 500, underscoring the risk associated with investing in InnovAge at this time.