Is Purple Innovation, Inc. overvalued or undervalued?

As of 10 May 2022, the valuation grade for Purple Innovation, Inc. has moved from fair to risky, indicating a deterioration in its financial standing. The company appears to be overvalued, given its significant negative ratios, including a Price to Book Value of 62.50 and an EV to EBITDA of -13.60. Additionally, the Return on Capital Employed (ROCE) stands at a troubling -66.14%, reflecting poor operational efficiency.
In comparison to peers, Purple Innovation's valuation metrics are concerning; for instance, Ethan Allen Interiors, Inc. has a P/E ratio of 28.41, while Arhaus, Inc. boasts a P/E of 22.58, both indicating a more favorable valuation. Furthermore, Purple's stock has underperformed over the long term, with a 3-year return of -59.84% compared to the S&P 500's 70.41% during the same period, reinforcing the notion that the stock is not a sound investment at its current price.