Is KNOT Offshore Partners LP overvalued or undervalued?

As of 10 September 2025, the valuation grade for KNOT Offshore Partners LP has moved from very attractive to expensive, indicating a shift in perception regarding its value. The company appears overvalued based on its current metrics, particularly with a P/E ratio of 5, which is significantly lower than the industry average, and an EV to EBITDA ratio of 5.41, which is also on the lower end compared to peers. Additionally, the PEG ratio stands at a remarkably low 0.08, suggesting that the stock may not be justified at its current price.
In comparison to its peers, Genco Shipping & Trading Ltd. has a much higher P/E ratio of 46.00, while Teekay Corp. shows a P/E of 4.37, indicating that KNOT Offshore Partners LP is positioned at a higher valuation relative to some competitors despite its recent downgrade. The company's recent stock performance has been strong, with a year-to-date return of 62.75%, significantly outpacing the S&P 500's 12.22% during the same period. However, the long-term returns show a concerning trend, with a 3-year decline of -43.32% compared to the S&P 500's 70.41%, reinforcing the notion that the stock may not sustain its current valuation.