Is Paylocity Holding Corp. overvalued or undervalued?

As of 6 February 2025, the valuation grade for Paylocity Holding Corp. has moved from fair to expensive, indicating that the company is currently overvalued. The P/E ratio stands at 46, significantly higher than the industry average of approximately 41.45 for its closest peer, which is AppLovin Corp. Additionally, the EV to EBITDA ratio is 25.89, while the PEG ratio is at 2.01, suggesting that the stock may be priced too high relative to its growth prospects.
In comparison to its peers, Gen Digital Inc. presents a more attractive valuation with a P/E of 28.71 and an EV to EBITDA of 12.62, highlighting the relative overvaluation of Paylocity. Furthermore, the company's recent stock performance has lagged behind the S&P 500, with a year-to-date return of -10.86% compared to the index's 2.44%. Overall, these metrics suggest that Paylocity Holding Corp. is overvalued in the current market environment.