Is Iris Energy Ltd. overvalued or undervalued?

As of 11 May 2022, the valuation grade for Iris Energy Ltd. changed from does not qualify to risky, indicating a more cautious outlook. The company appears to be overvalued given its financial metrics, particularly with a Price to Book Value of 1.65 and an EV to EBITDA ratio of 17.16, which suggests a high valuation relative to its earnings before interest, taxes, depreciation, and amortization. Additionally, the negative ROCE of -1.50% and ROE of -2.47% further highlight the company's struggles in generating returns for shareholders.
In comparison to its peers, Iris Energy Ltd. has a significantly higher EV to EBITDA ratio than CleanSpark, Inc. at 13.2099, which is classified as attractive. Furthermore, its P/E ratio is not applicable due to losses, contrasting sharply with Innodata, Inc., which has a P/E of 39.1479 and is rated fair. Notably, Iris Energy Ltd. has outperformed the S&P 500 across multiple time frames, with a year-to-date return of 269.86% compared to the S&P 500's 12.22%, reinforcing the volatility and speculative nature of its current valuation.