Is Live Oak Bancshares, Inc. overvalued or undervalued?

As of 10 December 2024, the valuation grade for Live Oak Bancshares, Inc. has moved from very expensive to expensive, indicating a shift in perception regarding its market valuation. Based on the analysis, the company is currently overvalued. The P/E ratio stands at 21, which is higher than the industry average P/E of approximately 20.69, while the EV to EBITDA ratio is 3.16, suggesting a premium compared to peers like Renasant Corp., which has a P/E of 16.22 and is rated attractive.
Additionally, Live Oak's ROE is relatively low at 5.91%, especially when compared to its impressive ROCE of 260.31%, which may indicate inefficiencies in generating shareholder returns. In terms of recent performance, the stock has underperformed the S&P 500 over the past year, with a return of -12.17% compared to the index's 10.26%. Overall, these factors reinforce the conclusion that Live Oak Bancshares, Inc. is overvalued in the current market environment.