Is Li-Cycle Holdings Corp. overvalued or undervalued?

As of 27 January 2022, the valuation grade for Li-Cycle Holdings Corp. has moved from does not qualify to risky. The company appears to be overvalued given its current financial metrics. The P/E ratio is not applicable due to losses, while the Price to Book Value stands at an extremely low 0.01, indicating significant undervaluation relative to its book value. Additionally, the EV to EBITDA ratio is at -3.41, further emphasizing the company's financial struggles.
In comparison to its peers, Li-Cycle's valuation metrics are notably poor. For instance, Global Partners LP, which is rated very attractive, has a P/E ratio of 11.39 and an EV to EBITDA of 8.15, while DNOW, Inc. shows a fair valuation with a P/E of 16.71 and an EV to EBITDA of 8.32. The stark contrast between these peers and Li-Cycle's negative ratios suggests that the company is not only struggling but also overvalued in the current market context. The company's stock has significantly underperformed, with a year-to-date return of -96.41% compared to a modest 2.44% return for the S&P 500, reinforcing the notion of overvaluation.