Is Novanta, Inc. overvalued or undervalued?

As of 7 July 2025, the valuation grade for Novanta, Inc. has moved from fair to very expensive, indicating a significant shift in its valuation outlook. The company is currently overvalued, with a P/E ratio of 61, a Price to Book Value of 5.95, and an EV to EBITDA of 26.72. In comparison, peers such as Cognex Corp. have a P/E of 61.49 and Onto Innovation, Inc. shows a more favorable EV to EBITDA of 13.94, highlighting Novanta's relative overvaluation.
Recent performance metrics further underscore this valuation concern, as Novanta's stock has underperformed against the S&P 500, with a year-to-date return of -23.27% compared to the index's 12.22%. Over the past year, the company has seen a decline of 30.57%, while the S&P 500 gained 17.14%, reinforcing the notion that Novanta is not only overvalued but also struggling to deliver returns in a favorable market environment.