Is RadNet, Inc. overvalued or undervalued?

As of 12 May 2025, RadNet, Inc. has moved from a fair to a risky valuation grade, indicating a significant deterioration in its perceived value. The company is currently overvalued, with a P/E ratio of 137, which is substantially higher than the industry average. Additionally, RadNet's EV to EBITDA stands at 21.25, while its EV to EBIT is at 57.50, both suggesting that the company is trading at a premium compared to its earnings potential.
In comparison to its peers, RadNet's P/E ratio is notably high, especially when juxtaposed with Guardant Health, Inc., which has a negative P/E of -14.92, and Amedisys, Inc., which is considered expensive at a P/E of 20.53. Furthermore, RadNet's ROCE of 6.62% and ROE of 3.57% reflect underwhelming returns relative to its valuation. The recent stock performance shows that RadNet has underperformed against the S&P 500 over the past year, with a decline of 6.59% compared to the index's gain of 10.26%, reinforcing the notion that the stock is currently overvalued.