Is NetScout Systems, Inc. overvalued or undervalued?

As of 25 January 2024, NetScout Systems, Inc. has moved from a fair to a risky valuation grade. The company is currently considered overvalued based on its financial metrics. The P/E ratio stands at 36, which is significantly higher than the industry average, while the EV to EBITDA ratio is 15.84, indicating a premium valuation compared to peers like Progress Software Corp., which has a P/E of 37.30 and an EV to EBITDA of 15.08, and Envestnet, Inc. with a P/E of 85.75 and an EV to EBITDA of 19.46.
The company's ROE is at a low 5.11%, and the PEG ratio of 2.66 suggests that growth expectations may not justify the current price. With a current price of $24.14, the stock has outperformed the S&P 500 over the past year, returning 26.92% compared to the index's 10.26%. However, given the high valuation ratios and relatively low returns on equity, NetScout appears to be overvalued in the current market environment.