Is Quanex Building Products Corp. overvalued or undervalued?

As of 23 May 2025, the valuation grade for Quanex Building Products Corp. has moved from fair to very expensive, indicating a significant shift in its market perception. The company is currently overvalued, with a P/E ratio of 46, which is substantially higher than its peers, such as Apogee Enterprises at 8.57 and American Woodmark Corp. at 7.10. Additionally, the EV to EBITDA ratio stands at 24.48, further highlighting the premium at which Quanex is trading compared to its industry.
In terms of financial performance, Quanex's ROCE is only 4.01% and ROE is a mere 2.10%, suggesting inefficiencies in generating returns relative to its equity and capital employed. The Price to Book Value is 0.97, which is relatively low, but does not compensate for the high valuation multiples. Recent stock performance shows that Quanex has underperformed the S&P 500 over various time frames, including a year-to-date decline of 23.51% compared to a 2.44% increase in the index, reinforcing the notion that the stock is overvalued in the current market environment.