Is Purecycle Technologies, Inc. overvalued or undervalued?

As of 7 May 2025, the valuation grade for Purecycle Technologies, Inc. has moved from does not qualify to risky, indicating a significant shift in its perceived investment quality. The company appears to be overvalued, given its high Price to Book Value of 7.45 and negative EV to EBITDA of -18.75, which suggest that investors are paying a premium despite the company's financial struggles. Additionally, the ROE stands at a concerning -80.98%, further highlighting the challenges faced by the firm.
In comparison to its peers, Purecycle's valuation ratios are starkly unfavorable; for instance, Clean Harbors, Inc. has a P/E ratio of 34.32 and EV to EBITDA of 13.59, while Stericycle, Inc. boasts a P/E of 81.41 and EV to EBITDA of 17.62. These figures illustrate that Purecycle is not only underperforming relative to its industry but is also burdened by significant losses. Despite its recent stock performance, which outpaced the S&P 500 with a 1-year return of 68.96% compared to 17.14%, the underlying financial metrics suggest that the stock is overvalued in the current market.