Is Methode Electronics, Inc. overvalued or undervalued?

As of 7 December 2023, Methode Electronics, Inc. has moved from a fair to a risky valuation grade, indicating a significant deterioration in its financial health. The company is currently considered overvalued given its negative earnings performance, with a P/E ratio of NA due to losses, a Price to Book Value of 0.43, and an EV to EBITDA of 10.83. These metrics suggest that the company is not generating sufficient returns relative to its valuation.
In comparison to its peers, Methode Electronics shows stark contrasts; Knowles Corp. has a P/E ratio of 116.75 and an EV to EBITDA of 16.31, while Bel Fuse, Inc. stands at a fair valuation with a P/E of 27.60 and an EV to EBITDA of 18.36. The company’s recent stock performance has been poor, with a year-to-date return of -24.60%, significantly underperforming the S&P 500's 2.44% gain. Overall, the combination of negative returns, poor ratios, and a risky valuation grade suggests that Methode Electronics is overvalued in the current market.