Is Paramount Skydance Corp. overvalued or undervalued?

As of 4 May 2023, the valuation grade for Paramount Skydance Corp. has moved from very attractive to risky, indicating a shift in investor sentiment. The company appears to be overvalued, as reflected by its P/E ratio of 30.63, which is significantly higher than the industry average, and an EV/EBITDA ratio of 12.82. Additionally, the absence of a PEG ratio suggests that growth expectations may not justify the current valuation.
In comparison with peers, Paramount Skydance Corp.'s high P/E ratio stands out against others in the media and entertainment sector, indicating a potential overvaluation. For instance, if we consider a peer like Disney, which typically maintains a more moderate P/E, it further emphasizes the risk associated with Paramount's current valuation. Despite the company's impressive stock performance, with a YTD return of 70.89% compared to the S&P 500's 12.22%, the long-term outlook remains concerning, especially given the negative returns over the 3Y and 5Y periods.