Is Lavoro Ltd. overvalued or undervalued?

As of 9 August 2022, the valuation grade for Lavoro Ltd. moved from expensive to risky, indicating a significant shift in its perceived value. The company is currently considered overvalued, particularly given its P/E ratio is not applicable due to losses, while its Price to Book Value stands at 1.85, and the EV to EBITDA ratio is at 16.05. Additionally, Lavoro's ROE is a concerning -104.04%, highlighting the company's struggles in generating returns for shareholders.
In comparison to its peers, Lavoro Ltd. shows a stark contrast with Global Partners LP, which has a P/E of 11.39 and an EV to EBITDA of 8.15, and DNOW, Inc., with a P/E of 16.71 and an EV to EBITDA of 8.32. These figures suggest that Lavoro is not only underperforming but also carries a higher risk profile relative to its competitors. Furthermore, Lavoro's stock has significantly underperformed against the S&P 500, with a year-to-date return of -54.28% compared to the index's 2.44%, reinforcing the notion that the company is overvalued in the current market context.