Is Psychemedics Corp. overvalued or undervalued?

As of 29 March 2022, the valuation grade for Psychemedics Corp. has moved from very expensive to risky, indicating a significant shift in its perceived value. The company is currently overvalued based on its financial metrics, particularly given its negative P/E ratio and troubling returns on capital. Key ratios include a Price to Book Value of 2.93, an EV to EBITDA of 14.29, and a ROCE of -43.00%.
In comparison to its peers, Psychemedics Corp. has a much higher EV to EBITDA ratio than Brookdale Senior Living, Inc. at 3.1885 and National HealthCare Corp. at 8.2930, both of which are also classified as risky or fair. The company's recent stock performance has lagged behind the S&P 500, particularly over the longer term, with a 3-year return of -63.76% compared to the S&P 500's 58.74%. This further reinforces the conclusion that Psychemedics Corp. is currently overvalued.