Is Laboratory Corp. of America Holdings overvalued or undervalued?

As of 9 November 2023, the valuation grade for Laboratory Corp. of America Holdings has moved from expensive to very expensive. The company appears to be overvalued based on its current financial metrics. The P/E ratio stands at 28, while the industry average P/E is lower, indicating a premium valuation. Additionally, the EV to EBITDA ratio is 14.82, which is significantly higher than peers such as Quest Diagnostics, Inc. at 17.67 and Encompass Health Corp. at 12.80.
In terms of return on equity (ROE), Laboratory Corp. reports 9.28%, which is relatively modest compared to the elevated valuation it commands. The dividend yield is at 1.17%, which does not provide sufficient compensation for the risk associated with its high valuation. Overall, the combination of these ratios and the peer comparison suggests that Laboratory Corp. of America Holdings is overvalued in the current market environment.