Is Nicholas Financial, Inc. overvalued or undervalued?

As of 29 July 2022, the valuation grade for Nicholas Financial, Inc. has moved from expensive to risky. The company is currently overvalued based on its financial metrics. Key ratios include a Price to Book Value of 0.88, an EV to EBIT of 6.69, and a ROCE of 13.14%. In comparison, peers such as Ocwen Financial Corp. have a much more favorable EV to EBITDA of 0.2221, while loanDepot, Inc. shows a P/E ratio of -19.1641, indicating a challenging environment for Nicholas Financial.
The stock has underperformed against the S&P 500 across multiple time frames, with a year-to-date return of -15.89% compared to the S&P 500's 12.22%. This trend continues over longer periods, with a 5-year return of -30.50% versus the S&P's 96.61%, reinforcing the notion that Nicholas Financial, Inc. is not only overvalued but also struggling relative to broader market performance.