Is Montauk Renewables, Inc. overvalued or undervalued?

As of 13 March 2025, the valuation grade for Montauk Renewables, Inc. has moved from attractive to very expensive, indicating a significant shift in its perceived value. The company is currently deemed overvalued, with a P/E ratio of 28, which is higher than its peer UFP Technologies, Inc. at 27.51. Additionally, Montauk's EV to EBITDA stands at 7.31, while UFP Technologies has a much higher ratio of 18.48, further highlighting the disparity in valuation metrics.
In terms of return on capital employed (ROCE) and return on equity (ROE), Montauk reports 6.34% and 4.06%, respectively, which are relatively low compared to the expectations for a company in its sector. The recent stock performance has been notably poor, with a year-to-date decline of 47.74% compared to a modest gain of 2.44% for the S&P 500, reinforcing the notion that the stock is overvalued at its current price of $2.08.