Is Nova Lifestyle, Inc. overvalued or undervalued?

As of 11 May 2020, the valuation grade for Nova Lifestyle, Inc. has moved from attractive to risky, indicating a significant deterioration in its financial outlook. The company is currently considered overvalued, especially given its negative P/E ratio and poor returns on capital, with a ROCE of -52.38% and an ROE of -62.28%. The price-to-book value stands at 2.47, which, in conjunction with its EV to EBITDA of -5.08, suggests that investors are paying a premium for a company that is struggling to generate positive earnings.
In comparison to its peers, Nova Lifestyle, Inc. lags significantly behind The Lovesac Co., which has a P/E ratio of 18.56 and an EV to EBITDA of 7.96, indicating a much healthier valuation. Flexsteel Industries, Inc. also presents a more attractive profile with a P/E of 8.01 and an EV to EBITDA of 7.28. Furthermore, Nova's recent stock performance has been poor, with a year-to-date return of 103.63%, but this is overshadowed by a 1-year decline of 13.84%, contrasting sharply with the S&P 500's 10.26% return over the same period.