Is PennantPark Investment Corp. overvalued or undervalued?

As of 8 May 2024, the valuation grade for PennantPark Investment Corp. has moved from does not qualify to very attractive. The company appears undervalued based on its valuation metrics, particularly with a P/E ratio of 46, which is significantly higher than peers like Fidus Investment Corp. at 9.59 and Crescent Capital BDC, Inc. at 13.31. Additionally, the Price to Book Value stands at 0.91, and the EV to EBITDA is 7.01, indicating potential for growth compared to its market price.
Despite recent stock performance lagging behind the S&P 500, with a year-to-date return of -1.98% versus the index's 12.22%, the company's high dividend yield of 14.34% and ROCE of 12.84% suggest strong fundamentals. Overall, PennantPark Investment Corp. is positioned as undervalued relative to its peers and the broader market.