Is IPG Photonics Corp. overvalued or undervalued?

As of 29 October 2024, the valuation grade for IPG Photonics Corp. has moved from fair to risky, indicating a deterioration in its investment appeal. The company appears to be overvalued given its current financial metrics, with a Price to Book Value of 1.50, an EV to EBITDA ratio of 33.35, and a negative ROE of -8.50%. In comparison to peers, Fabrinet has a fair valuation with a P/E ratio of 41.84, while Skyworks Solutions, Inc. also holds a fair valuation with a P/E of 20.61, highlighting the relative overvaluation of IPG Photonics.
Despite some positive short-term returns, such as a 19.97% gain over the past year compared to the S&P 500's 17.14%, the longer-term outlook is concerning, with a 5-year return of -50.56% versus the S&P 500's 96.61%. This stark contrast in performance further reinforces the notion that IPG Photonics is currently overvalued.