Is Organon & Co. overvalued or undervalued?

As of 2 May 2024, the valuation grade for Organon & Co. has moved from risky to very attractive, indicating a significant improvement in its perceived value. The company is currently undervalued, with a P/E ratio of 3, which is substantially lower than the industry average, suggesting that the market may not be fully recognizing its potential. Additionally, the EV to EBITDA ratio stands at 6.41, while the ROE is remarkably high at 163.16%, reflecting strong profitability relative to shareholder equity.
In comparison to its peers, Organon & Co. shows a more favorable valuation profile, with a P/E of 2.8955 and an EV to EBITDA of 6.4527, indicating that it is trading at a discount relative to similar companies. Notably, the company's recent stock performance has lagged behind the S&P 500, particularly over the past year, where it has declined by 52.98% compared to the index's 10.26% increase. This discrepancy further supports the conclusion that Organon & Co. is undervalued in the current market environment.