Is Schrödinger, Inc. overvalued or undervalued?

As of 1 May 2024, Schrödinger, Inc. has moved from an attractive to a risky valuation grade, indicating a significant deterioration in its perceived investment quality. The company is currently overvalued, particularly given its negative earnings and substantial losses reflected in key ratios. The P/E ratio is not applicable due to the company being loss-making, while the Price to Book Value stands at 4.84, and the EV to EBITDA is at -7.03, highlighting the challenges in generating positive cash flows.
In comparison to peers, Schrödinger's valuation metrics are concerning. For instance, Sportradar Group AG has a P/E ratio of 110.21, while AvidXchange Holdings, Inc. boasts a P/E of 559.38, both indicating a stark contrast to Schrödinger's negative metrics. Furthermore, the company's return performance has lagged behind the S&P 500, particularly over the last three years, where it has declined by 30.90% compared to the S&P 500's gain of 58.74%. Overall, the combination of poor financial ratios and underperformance against peers suggests that Schrödinger, Inc. is currently overvalued.