Is Karooooo Ltd. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Karooooo Ltd. has moved from attractive to very attractive, indicating a strong improvement in its perceived value. The company appears to be undervalued, supported by a P/E ratio of 34, which, while higher than the industry average of approximately 30.12, is balanced by a robust ROCE of 47.99% and a PEG ratio of 1.00. Additionally, the EV to EBITDA ratio stands at 16.34, suggesting that the company's earnings before interest, taxes, depreciation, and amortization are being valued favorably relative to its enterprise value.
In comparison to its peers, HealthStream, Inc. has a higher P/E ratio of 40.95, while Planet Labs PBC shows a negative P/E, indicating significant risk. Despite recent stock performance showing a decline of 13.01% over the past week compared to a 1.70% gain in the S&P 500, Karooooo Ltd. has outperformed the index over the past three years with a return of 93.52% against the S&P 500's 81.19%. This suggests that while the stock may be facing short-term challenges, its long-term growth potential remains strong.