Is Nova Lifestyle, Inc. overvalued or undervalued?

As of 11 May 2020, the valuation grade for Nova Lifestyle, Inc. moved from expensive to risky, indicating a shift towards a more cautious outlook on the company's financial health. Based on the available metrics, Nova Lifestyle appears to be overvalued, particularly given its negative performance indicators, including a Price to Book Value of 2.47 and an EV to EBITDA of -5.08. The company's ROCE stands at -52.38%, and ROE at -62.28%, both of which highlight significant inefficiencies in generating returns.
In comparison to its peers, Nova Lifestyle's valuation ratios are concerning; for instance, Flexsteel Industries, Inc. has a P/E ratio of 9.47 and an EV to EBITDA of 8.36, while The Lovesac Co. shows a P/E of 20.70 and an EV to EBITDA of 8.89, both indicating stronger financial positions. Despite Nova's impressive short-term stock performance, with a 1-month return of 189.77% compared to the S&P 500's 2.33%, the long-term outlook remains bleak, as evidenced by a 5-year return of -38.55% versus the S&P 500's 96.61%.