Is Optical Cable Corp. overvalued or undervalued?

As of 13 March 2024, Optical Cable Corp. has moved from an attractive to a risky valuation grade, indicating a significant deterioration in its financial outlook. The company is currently assessed as overvalued, particularly given its negative performance metrics. Key ratios include a Price to Book Value of 1.22, an EV to EBIT of -16.55, and an EV to EBITDA of -29.80, all of which reflect the company's struggles in generating positive earnings.
In comparison to its peers, Optical Cable Corp. shows a stark contrast to companies like Frequency Electronics, Inc., which boasts a P/E ratio of 9.35 and an EV to EBITDA of 19.35, and BK Technologies Corp., with a P/E of 24.53 and an EV to EBITDA of 20.24. These peers are classified as very attractive, highlighting the challenges Optical Cable Corp. faces in its current valuation. Additionally, the company's stock has underperformed relative to the S&P 500 over various time frames, particularly with a year-to-date return of -23.55% compared to the S&P 500's 2.44%, further reinforcing the notion that it is overvalued in the current market.