Is Lee Enterprises, Inc. overvalued or undervalued?

As of 8 December 2022, the valuation grade for Lee Enterprises, Inc. has moved from attractive to risky, indicating a significant deterioration in its financial outlook. The company is currently deemed overvalued, particularly given its negative price-to-book value of -1.06 and a high EV to EBIT ratio of 30.99, which suggests that investors are paying a premium for earnings that are not currently being generated. Additionally, the return on capital employed (ROCE) stands at a mere 3.85%, further highlighting the company's struggles.
In comparison to its peers, Lee Enterprises shows a stark contrast; Daily Journal Corp. has a P/E ratio of 22.13 and Gannett Co., Inc. boasts an EV to EBITDA of 6.76, both of which reflect healthier valuations within the industry. Furthermore, Lee Enterprises has underperformed significantly against the S&P 500, with a year-to-date return of -58.46% compared to the S&P's 2.44%. This combination of poor performance metrics and unfavorable peer comparisons reinforces the conclusion that Lee Enterprises is currently overvalued.