Is PHINIA, Inc. overvalued or undervalued?

As of 31 January 2025, the valuation grade for PHINIA, Inc. has moved from expensive to very expensive, indicating a significant shift in its perceived value. The company is currently overvalued, with a P/E ratio of 19, which is higher than the peer average of approximately 18.52 for similar companies. Additionally, PHINIA's EV to EBITDA ratio stands at 5.22, while its Price to Book Value is 1.11, suggesting that investors are paying a premium for its earnings and assets compared to its peers.
In comparison, Luminar Technologies, Inc. is classified as risky with a P/E ratio of -0.36, highlighting the stark contrast in valuation between the two companies. Furthermore, PHINIA's ROCE is at 13.41% and ROE at 5.89%, which, while decent, do not justify its current high valuation relative to its peers. Over the past year, PHINIA has underperformed against the S&P 500, with a return of 7.21% compared to the index's 10.26%, reinforcing the notion that the stock may be overvalued at its current price of 42.67.