Is MainStreet Bancshares, Inc. overvalued or undervalued?

As of 27 January 2025, the valuation grade for MainStreet Bancshares, Inc. has moved from expensive to risky, indicating a shift in perception of its financial health. The company appears to be overvalued, particularly given its negative P/E ratio due to losses, a Price to Book Value of 0.67, and an EV to EBITDA of 2.71, which suggests that the market may be pricing in more value than the company's fundamentals support.
When compared to peers, Community West Bancshares has a P/E of 15.19, and Colony Bankcorp, Inc. stands out with a very attractive P/E of 10.86, highlighting that MainStreet's valuation is not justified relative to its competitors. Additionally, while MainStreet has shown a YTD return of 16.52%, it underperformed the S&P 500's return of 12.22%, and over the last three years, it has significantly lagged with a return of -11.39% compared to the S&P 500's 70.41%. This performance further reinforces the notion that MainStreet Bancshares is currently overvalued.