Is Lifestance Health Group, Inc. overvalued or undervalued?

As of 8 November 2021, the valuation grade for Lifestance Health Group, Inc. moved from does not qualify to risky, indicating a deterioration in its investment appeal. The company appears to be overvalued, given its significant negative P/E ratio and poor returns on capital, with a Price to Book Value of 1.56, an EV to EBITDA of 49.80, and an EV to Sales ratio of 1.92. In comparison, peers such as Encompass Health Corp. have a more favorable P/E of 20.94 and an EV to EBITDA of 12.89, while The Ensign Group, Inc. shows a P/E of 32.46 and an EV to EBITDA of 21.10, highlighting the substantial gap in valuation metrics.
The company's stock has underperformed against the S&P 500, with a year-to-date return of -27.14% compared to the index's 12.22%, and a one-year return of -20.33% versus 17.14% for the S&P 500. This trend reinforces the notion that Lifestance Health Group, Inc. is not only overvalued but also struggling to deliver returns relative to broader market benchmarks.