Is Pool Corp. overvalued or undervalued?

As of 23 April 2024, Pool Corp. has moved from an expensive to a very expensive valuation grade. The company is currently overvalued, with a P/E ratio of 27, significantly higher than peers such as Genuine Parts Co. at 16.70 and WESCO International, Inc. at 15.35. Additionally, Pool Corp.'s EV to EBITDA stands at 19.32, compared to Genuine Parts Co. at 11.31, indicating a premium valuation relative to its industry counterparts.
The company's return on equity (ROE) is strong at 32.85%, and its return on capital employed (ROCE) is also impressive at 25.56%. However, these performance metrics do not justify the high valuation, especially considering the stock's poor performance relative to the S&P 500 over the past year, where it has declined by 13.01% compared to the index's gain of 10.26%. Overall, Pool Corp. appears to be overvalued in the current market environment.