Is MACOM Technology Solutions Holdings, Inc. overvalued or undervalued?

As of 6 February 2025, the valuation grade for MACOM Technology Solutions Holdings, Inc. has moved from expensive to risky, indicating a shift in perception regarding its valuation. The company appears to be overvalued, given its high P/E ratio of 80, significantly above the peer average of 73.15 for similar companies. Additionally, the EV to EBITDA ratio stands at 83.44, which is considerably higher than peers like Fabrinet at 34.55, further supporting the overvaluation narrative.
In comparison to its peers, MACOM's PEG ratio of 1.06 suggests that while it may have growth potential, the current price does not justify its earnings relative to growth when compared to competitors like Skyworks Solutions, which has a much lower P/E of 20.61. Despite recent stock performance, where MACOM outperformed the S&P 500 over the 1Y (29.72% vs. 17.14%) and 3Y (139.44% vs. 70.41%) periods, the overall valuation metrics indicate that the stock is not justified at its current price level.