Is NetSTREIT Corp. overvalued or undervalued?

As of 4 November 2024, the valuation grade for NetSTREIT Corp. has moved from expensive to risky, indicating a shift in perception regarding its investment appeal. Based on the current metrics, the company appears to be overvalued, particularly when considering its high P/E ratio of 71, which significantly exceeds the industry average, and an EV to EBITDA ratio of 9.81. Additionally, the company's return on equity (ROE) stands at a mere 1.43%, suggesting inefficiencies in generating profit relative to shareholder equity.
In comparison to peers, NetSTREIT Corp.'s P/E ratio of 69.57 is notably higher than that of The GEO Group, Inc. at 32.63 and Uniti Group, Inc. at 50.89, both of which are also considered risky. Furthermore, the company's recent stock performance shows a year-to-date return of 29.68%, which outpaces the S&P 500's 12.22% return, but its longer-term performance, particularly over three and five years, lags behind the benchmark significantly. This mixed performance, alongside high valuation ratios, reinforces the view that NetSTREIT Corp. is overvalued in the current market context.