Is Power Integrations, Inc. overvalued or undervalued?

As of 30 June 2025, the valuation grade for Power Integrations, Inc. has moved from expensive to very expensive, indicating a significant increase in perceived overvaluation. The company is currently overvalued, supported by a P/E ratio of 83, a Price to Book Value of 4.19, and an EV to EBITDA of 49.02, all of which are substantially higher than its peers. For instance, Fabrinet has a P/E of 41.84 and Skyworks Solutions, Inc. has a P/E of 20.61, highlighting the stark contrast in valuation metrics.
In addition, Power Integrations has shown disappointing stock performance compared to the S&P 500, with a year-to-date return of -26.14% versus the index's 12.22%. Over the past three years, the stock has declined by 33.82%, while the S&P 500 has gained 70.41%, further reinforcing the notion that the stock is overvalued in the current market environment.